Q2 2025 M&A Market Outlook: Implications for Turkish Investors in the United States

The U.S. M&A market in Q2 2025 is characterized by cautious optimism. After a subdued 2023 and a gradual recovery in 2024, deal activity is accelerating — driven by strategic acquirers with strong balance sheets, private equity sponsors sitting on record dry powder, and sellers who have adjusted their valuation expectations to reflect the higher interest rate environment.

For Turkish companies and investors pursuing U.S. acquisitions, the current environment presents both opportunities and challenges. Valuations in many sectors have moderated from their 2021 peaks, creating attractive entry points. At the same time, financing costs remain elevated, regulatory scrutiny is intense, and CFIUS continues to be a significant consideration for cross-border transactions.

U.S. M&A deal volume in Q1 2025 showed a meaningful recovery from the 2023 trough:

• Strategic M&A: Corporate acquirers drove the majority of deal activity, particularly in technology, healthcare, and financial services
• Private equity: Sponsor-backed transactions increased as PE firms deployed capital from record fundraising vintages
• Cross-border M&A: Inbound foreign investment into the United States remained active, with European and Asian acquirers leading deal activity

Valuations across most sectors have moderated from the 2021 peak:

• Technology: Software multiples have compressed from 15–20x revenue to 8–12x revenue for high-growth companies
• Healthcare: Healthcare services and medtech valuations remain elevated, driven by demographic tailwinds
• Industrial: Industrial and manufacturing valuations are attractive, with many companies trading at 6–9x EBITDA
• Real estate: Commercial real estate valuations have declined significantly from 2021 peaks, creating opportunities for well-capitalized buyers

The financing environment for M&A remains challenging:

• Leveraged buyout (LBO) financing: Leveraged loan and high-yield bond markets have reopened, but at higher rates than the 2020–2021 era
• Strategic acquirer financing: Investment-grade companies can access acquisition financing at reasonable rates
• All-cash transactions: Turkish companies with strong balance sheets can compete effectively in all-cash transactions, avoiding the financing risk that affects leveraged buyers

The technology sector remains the most active for M&A, driven by:

• AI and machine learning: Acquisitions of AI companies and AI-enabled software businesses
• Cybersecurity: Consolidation in the fragmented cybersecurity market
• SaaS: Continued consolidation of vertical SaaS businesses

For Turkish technology companies: Turkish software and technology companies have been active acquirers of U.S. technology businesses, particularly in enterprise software and B2B SaaS. The moderation in software valuations creates attractive opportunities.

CFIUS consideration: Technology acquisitions involving AI, semiconductors, or sensitive data are subject to heightened CFIUS scrutiny. Turkish acquirers should assess CFIUS implications early in the process.

Healthcare M&A remains robust:

• Healthcare services: Physician practice management, behavioral health, and home health
• Medical devices: Consolidation among medical device manufacturers
• Life sciences: Pharmaceutical and biotech acquisitions

For Turkish healthcare companies: Turkish pharmaceutical and medical device companies have been expanding into the U.S. market. The healthcare sector offers attractive acquisition targets, but regulatory complexity (FDA, CMS) requires specialized due diligence.

Financial services M&A is accelerating:

• Fintech: Acquisitions of fintech companies by traditional financial institutions
• Insurance: Consolidation in the insurance distribution market
• Asset management: Mergers among asset managers seeking scale

For Turkish financial institutions: Turkish banks and financial institutions considering U.S. acquisitions face significant regulatory hurdles (Federal Reserve, OCC, FDIC approval). Engage regulatory counsel early.

The industrial sector offers attractive opportunities:

• Reshoring: U.S. manufacturers benefiting from supply chain reshoring trends
• Defense: Defense and aerospace suppliers benefiting from increased defense spending
• Energy transition: Companies involved in renewable energy, battery storage, and grid modernization

For Turkish industrial companies: Turkish manufacturers in automotive, textiles, and industrial goods have been expanding their U.S. presence. The industrial sector offers attractive valuations and strategic fit for Turkish acquirers.

CFIUS remains the most significant regulatory consideration for Turkish acquirers of U.S. businesses. Key Q2 2025 developments:

• Mandatory filing expansion: CFIUS has expanded the categories of transactions subject to mandatory filing, including certain investments in U.S. businesses involved in critical technologies, critical infrastructure, and sensitive personal data
• Processing times: CFIUS review timelines have extended, with complex cases taking 6–12 months
• Mitigation: CFIUS is increasingly imposing mitigation measures (security agreements, board observer restrictions, data access limitations) rather than blocking transactions outright

Recommendation: Turkish acquirers should conduct a CFIUS risk assessment before signing any acquisition agreement. For transactions with potential CFIUS issues, consider a voluntary filing to obtain certainty.

The FTC and DOJ Antitrust Division remain active in reviewing M&A transactions:

• Horizontal mergers: Transactions that combine direct competitors face heightened scrutiny
• Vertical mergers: The agencies have increased scrutiny of vertical transactions
• HSR filing thresholds: Transactions above the HSR thresholds require pre-merger notification and a waiting period

Turkish companies seeking U.S. acquisitions should:

• Engage a U.S. investment bank or M&A advisor with experience in cross-border transactions
• Build relationships with U.S. private equity firms that may be seeking exit opportunities
• Consider proprietary deal sourcing through industry relationships

Cross-border M&A due diligence for Turkish acquirers should include:

• Legal due diligence: Corporate structure, contracts, litigation, intellectual property, employment
• Financial due diligence: Historical financials, quality of earnings, working capital
• Tax due diligence: U.S. federal and state tax exposure, transfer pricing, tax attributes
• Regulatory due diligence: CFIUS, antitrust, sector-specific regulatory approvals
• Operational due diligence: Management team, technology systems, customer relationships

Turkish acquirers should consider:

• Asset vs. stock purchase: Asset purchases provide a stepped-up tax basis and allow the buyer to select which liabilities to assume
• Representations and warranties insurance: RWI has become standard in U.S. M&A and provides cleaner exits for sellers
• Earnouts: Earnouts can bridge valuation gaps but require careful structuring to avoid disputes
• Escrow arrangements: Escrow provides security for post-closing indemnification claims

Q2 2025 presents attractive opportunities for Turkish companies and investors pursuing U.S. acquisitions. Valuations have moderated, deal activity is recovering, and Turkish acquirers with strong balance sheets can compete effectively. The key challenges — CFIUS, financing costs, regulatory complexity — are manageable with proper planning and experienced advisors.

ULF New York advises Turkish clients on U.S. M&A transactions, from deal sourcing and due diligence through closing and post-closing integration. Contact us to discuss your U.S. acquisition strategy.

This article is for informational purposes only and does not constitute legal or financial advice. M&A market conditions are subject to rapid change; consult qualified advisors for current guidance.