July 29, 2025 Strategic Deals Reshape Manufacturing in 2025

Amid global volatility, industrial leaders are reshaping portfolios for resilience and growth.

In 2025, industrial manufacturing dealmaking is undergoing a strategic reset. Overall M&A volume remains stable with the activity underway being more deliberate, focused, and aligned with long-term value creation. For dealmakers, this represents not a slowdown, but a recalibration.

PwC’s Industrial Manufacturing US Deals 2025 Midyear Outlook outlines how companies are adapting capital allocation strategies amid macroeconomic uncertainty, geopolitical risks and emerging opportunities in tech-driven transformation. What is emerging is a market defined less by the frequency of deals and more by their strategic impact. Here’s a closer look at the key developments.

Tariffs are reshaping cross-border M&A

New US tariffs introduced this year added friction to cross-border deals. Stalled negotiations, wider bid-ask spreads and valuation alignment challenges are becoming increasingly common. For multinational manufacturers and foreign investors, the geopolitical and trade environment is now a central part of deal risk assessment.

Yet this volatility is also creating opportunities. Domestic assets are gaining appeal for both US and international buyers seeking insulation from trade-related disruption. Companies that proactively plan for multiple scenarios and adapt pricing models are better positioned to sustain cross-border activity.

Strategic divestitures gain momentum

Industrial leaders are sharpening their focus on core capabilities. A wave of strategic divestitures is underway, particularly in non-core areas like advanced materials. Capital is then reallocated toward higher-growth segments. Portfolio optimization has become a strategic imperative.

These divestitures are also creating space for innovation. Shedding legacy assets allows for reinvestment in high-margin, tech-enabled operations and in M&A opportunities that support transformation goals.

Digital capabilities drive deal rationale

Automation and digital transformation remain central to the industrial deal agenda. Across the board, acquisitions that enhance productivity, agility and innovation are in demand. Technology is no longer a support function but is a core driver of competitiveness.

Strategic acquirers and private equity firms now prioritize deals that enhance operational technology and digitize factory floors. Acquiring digital capability – not just capacity – is increasingly central to industrial M&A strategies.

M&A as a supply chain strategy

Supply chain reconfiguration continues to influence deal activity. Amid ongoing geopolitical risk and cost pressure, manufacturers are pursuing resilience through targeted acquisitions. M&A is increasingly being used to reduce reliance on distant suppliers and bring operations closer to home.

Domestic and nearshore deals are strategic moves to enhance agility, maintain continuity and meet customer expectations. In many cases, these acquisitions are facilitating a broader reinvention of procurement and production strategies.

Private Equity sharpens focus

Although overall PE activity fluctuates, targeted investment continues in sectors with long-term tailwinds, particularly business services and industrial tech. These segments offer lower tariff exposure and greater digital value creation potential.

PE firms are also narrowing focus to high conviction deals in resilient sectors. With dry powder still available, PE remains a significant force in shaping the industrial landscape through selective, impactful investments.

Looking Ahead

Heading into the second half of 2025, success in industrial M&A will depend on a blend of discipline, agility and strategic foresight. Getting comfortable with uncertainty will be just as important as having a clear vision. Several priorities should remain front and center:

• Stay ahead of policy shifts. Regulatory and trade developments will continue to evolve. A proactive, scenario-based approach to deal structuring and diligence is essential.
• Double down on digital. Whether through acquisition or internal investment, digital capabilities must be embedded to enable adaptability and efficiency.
• Focus on transformation, not just scale. The most impactful deals will be those that fundamentally reshape strategic positioning, not merely expand footprint.

A time for bold investment

The future belongs to those who invest boldly – whether in innovation, resilience or strategic reinvention – to not only navigate disruption but define the next era of industrial growth.

Despite persistent challenges, industrial M&A remains one of the most effective tools to reshape portfolios, strengthen competitive advantage and pursue long-term success. In this moment of recalibration, investors have the opportunity to lead the next industrial evolution.

About the Author:
Michelle Ritchie is PwC’s US Industrial Products Deals Leader. With 25+ years of transaction experience, she advises clients on acquisition and divestiture activities, specializing in aerospace, defense, medical devices, and technology sectors. Michelle’s passion lies in working with clients to achieve their strategic vision and finding the most direct path to success.

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