Swiss M&A Trends in Industrials & Services

M&A activity in the automotive sector is being driven by structural realignment, as OEMs and suppliers divest non-core assets to refocus on electrification and digital transformation. European and Japanese automakers are consolidating brand portfolios, while Chinese players streamline to improve efficiency and competitiveness. Cost pressures and policy uncertainty are pushing companies to localise supply chains through acquisitions and joint ventures. Notable activity is emerging in Southeast Asia and parts of Europe, where Chinese and Japanese firms are investing in local production bases to mitigate geopolitical risk.

Collaboration is accelerating, particularly in batteries, software, and autonomous vehicle tech, with joint ventures becoming increasingly common. One example is General Motors’ $625m joint venture with Lithium Americas, which closed in late 2024 to secure access to critical raw materials. A growing number of automotive suppliers – especially in Europe and China – are also expanding into defence, acquiring certified suppliers to tap into rising security budgets and leverage synergies with automotive manufacturing capabilities.

M&A activity in industrial manufacturing remains selective in 2025, shaped by tariff uncertainty, supply chain realignment, and pressure to modernise. Chinese companies are redirecting investment toward Southeast Asia – especially Thailand, Malaysia, and Vietnam – as part of broader nearshoring strategies to reduce exposure to US-China trade dynamics.

Technology remains a core M&A driver, with strong momentum in automation, robotics, and AI-powered manufacturing. In China, state-backed initiatives are accelerating deals in semiconductors and industrial automation, reinforcing national goals for industrial modernisation. Infrastructure and defence-related manufacturing continue to attract investment, particularly in Europe and China. Rising defence budgets are prompting strategic and PE buyers to pursue dual-use technologies and mission-critical capabilities.

M&A remains a strategic lever for transformation, as shown by Rieter’s proposed CHF713m ($860m) acquisition of Barmag from OC Oerlikon. Despite valuation gaps and cost pressures, activity persists in high-potential segments such as services, infrastructure, and components. Looking ahead, improved clarity around interest rates and trade policy could help restore investor confidence and unlock new deal momentum in the second half of 2025.

E&C M&A is holding steady in 2025, supported by sustained demand in residential housing, energy resilience, and healthcare infrastructure – despite headwinds from labour shortages, interest rate volatility, and shifting tariffs. In Japan, ageing demographics are driving succession-related divestitures, while in the US and Europe, immigration policy uncertainty is worsening skilled labour shortages. Strategic buyers are targeting scalable growth platforms, particularly in HVAC, electrical contracting, and specialised civil engineering. Labour-intensive segments are seeing rising deal activity as firms consolidate to address workforce gaps and expand operational reach.

Energy resilience and capital-intensive assets such as data centres and distributed energy systems are emerging as major M&A drivers. A standout example is James Hardie’s proposed $8.75bn acquisition of AZEK, aimed at building a leading platform in construction materials. Upstream engineering and design services tied to nuclear power, sustainable infrastructure, and AI-enabled construction are also attracting strong interest, reinforcing their role as key strategic growth segments for both financial and strategic investors.

After a slow start to 2025, M&A in business services is expected to stay resilient, driven by private equity interest in sectors with recurring revenues and scalable models. Platform strategies continue in accounting, legal, and engineering consulting – illustrated by MHA’s proposed acquisition of Baker Tilly South East Europe in May 2025. Legal services are attracting increased investment, especially in the US, where reforms like Arizona’s allowance of non-lawyer ownership are enabling tech-driven, integrated delivery models. Mid-market players in blue-collar services – such as HVAC, utilities, and electrical testing – also remain in demand for their stable, non-cyclical profiles.

Essential services like IT managed services, cybersecurity, and GovTech are drawing interest due to their business-critical roles. Staffing firms, once seen as turnaround cases, are now viewed as scalable opportunities as AI enhances efficiency and margins. However, one growing challenge for PE investors in professional services is the lack of clear exit paths. While consolidation and tech enablement continue, successful exits remain rare, raising questions about long-term returns and the sustainability of current investment themes.

Global M&A activity in A&D remains solid in 2025, driven by a focus on mission-critical technologies such as AI-enabled defence systems, drones, and cybersecurity. Companies are streamlining portfolios through carve-outs and bolt-on acquisitions, while private equity is showing growing interest in defence-tech. Notable deals include Boeing’s $10.5bn sale of parts of its digital aviation solutions business to Thoma Bravo.

Technological innovation remains central to sector strategies, with particular momentum in space and cyber defence. We expect unmanned systems, AI, and cybersecurity to remain top M&A priorities in the near term. While rising defence budgets across the US, Europe, and Asia are fuelling deal activity, regulatory hurdles and national security concerns are shaping deal structures. In Japan, for instance, joint ventures and minority stakes are increasingly favoured as full acquisitions face growing restrictions.