Global Merger Activity Slows in 2025, Indonesia Remains Active
Global merger and acquisition activity slows in 2025, Indonesia remains active
Geopolitical tensions and uncertainty over global trade tariffs have caused a decline in merger and acquisition (M&A) transaction activity in the mid-market segment throughout 2025. However, a number of transactions remain pending and awaiting more stable market conditions.
BDO’s M&A Horizons 2026 report shows that limited strategic planning due to economic uncertainty has contributed to this slowdown. Nevertheless, this does not reflect a permanent deceleration, as many investors continue to maintain their transaction plans.
In the Asia-Pacific region, mid-market transactions have become the primary focus of investment activity. Investors tend to favour smaller-scale transactions focused on operational improvement over large acquisitions.
In Southeast Asia, private equity investments reached approximately $9.1 billion through 59 transactions throughout 2025, demonstrating an increasingly selective investment environment.
Indonesia remains an active M&A market with a value of approximately $6.2 billion from 102 transactions. This data demonstrates sustained investor interest, although capital deployment is being conducted more cautiously. Consumer growth and accelerated digital adoption continue to attract both domestic and international investors.
Furthermore, sectoral dynamics such as consolidation in financial services and growing interest in technology, manufacturing, and sustainable energy sectors are also driving transaction activity.
According to Marvin Camangeg, Partner (Advisory) at BDO Indonesia, investors will increasingly demand higher due diligence standards and more creative transaction structures. He stated in a press release on Monday (16 March 2026) that should global trading conditions improve, transaction flows are expected to rebound, albeit with stricter selectivity levels.
The importance of assessing commercial sustainability
Due diligence in M&A transactions conventionally focuses more on verification of financial, tax, and legal aspects of companies. The objective is to ensure that historical information provided to investors is accurate and reliable. However, investors also assess the company’s future potential.
A company with strong financial reports may face declining market risks, potential customer decline, or increased competitive pressure. These risks are not entirely reflected in financial statements.
Commercial due diligence has become an important component in the investment decision-making process.
Marvin added that the relevance of commercial analysis is increasing in Indonesia as digital adoption accelerates, consumer behaviour changes, and regulations evolve. Comprehensive investment evaluation combines financial analysis with commercial analysis to provide a more complete picture of business prospects.
Beyond assessing historical performance, commercial due diligence also includes analysis of various external factors such as market conditions, growth potential, industry trends, competitive levels, and customer demand stability. This analysis helps ensure that growth projections in business plans are realistic and supported by adequate market conditions.
Industry disruption drives market validation
Amid increasing industry disruption, investors face greater pressure to validate market conditions behind each transaction. Digitalisation, changes in global supply chains, and shifts in consumer behaviour are shortening the life cycles of traditional business models.
Company valuations increasingly depend on future growth projections, particularly in the technology and digital sectors. Errors in market assumptions could pose significant risks to investors.
Foreign investors entering the Indonesian market face additional challenges from the complexity of local dynamics, regulations, and competitive levels. Independent market validation has become an important step to ensure more informed investment decisions.
Findings in manufacturing transaction evaluation
In evaluating transactions in Indonesia’s manufacturing sector, foreign investors found the target company’s financial performance to be stable with healthy margins. However, commercial due diligence revealed that the business was highly dependent on a small number of customers.
Additionally, order volumes were found to be more volatile than the apparent revenue trends. Market analysis also showed that growth projections used in business plans were inclined to be overly optimistic. These findings helped investors adjust transaction valuations and formulate more realistic post-acquisition strategies.
Integrating commercial analysis in transactions
Successful acquisitions depend not only on verified financial statements. Investors must also understand the sustainability of the company’s business model and whether market conditions support the growth expectations that underpin transaction valuations.
Experience shows that transactions that create long-term value are generally those in which commercial questions have been clearly answered before the deal is signed. With rising due diligence standards, investors who integrate commercial analysis into the evaluation process are considered to be in a stronger position to capture long-term value opportunities in the growing Southeast Asian mid-market.