This article includes a summary of the market, trends and legal aspects of M&A activity in Spain throughout 2024, along with an overview for 2025. It intends to provide readers with a clear understanding of the impact of the prevailing macroeconomic conditions on the M&A landscape, while also highlighting key trends in this practice.

Performance of the M&A Market in Spain in 2024

As was envisioned during 2023, 2024 was a fairly positive year in terms of M&A, although not all quarters of 2024 were consistent in terms of the number of transactions. As opposed to 2023, in 2024 the value of M&A transactions grew alongside the return of large transactions. The number of completed transactions increased slightly.

Numerous challenges conditioned the market in 2024, including the impact of the global economic context, the geopolitical situation, inflation and electoral processes in key countries. In this regard, an important factor was the high-interest-rate environment inherited from previous years, which limited the financing of transactions at the beginning of 2024, although the downward correction that took place in the second half of the year favoured a gradual recovery of investment. Another important challenge faced by the market has been the high competition for quality assets and differing valuation expectations, as there has been a mismatch between the expectations of purchasers and sellers and, consequently, a slowdown or even a standstill in a significant number of deals.

According to TTR Data’s annual M&A report for 2024, a total of 3,473 deals were closed (8.33% more than in 2023). This increase in the number of transactions was accompanied by a significant increase of the overall value of the deals, amounting to a total of EUR95.7 billion (10.61% more than in 2023).

As in the previous year, despite the fact that the Spanish market has been dominated by small transactions, certain transactions that were significant in terms of size also took place. Among them, the most important ones carried out during 2024 were the merger between Masmóvil and Orange, with a combined valuation of EUR18.6 billion, and the acquisition of Vodafone Spain by Zegona, for a total amount of EUR5 billion.

The main sectors in which most M&A deals were closed last year are those known for their stability and reliability. On top, the real estate sector recorded 646 closed deals, followed by the internet, software and IT services with 330, and the travel, hospitality and leisure sector with 224.

M&A Landscape in Spain for 2025

There is quite a bright prospect for Spanish M&A in 2025, fuelled by a robust recovery in deal value and strategic shifts towards technology and sustainability. The macroeconomic expectations are positive, supported by a 2% GDP growth forecast, declining interest rates and a pipeline of over EUR30 billion in projected deals.

As reported in TTR Data’s monthly report for January 2025, a total of 188 transactions have been registered, for an aggregate value of EUR2.121 billion.

Although the M&A landscape in Spain is preparing for a dynamic 2025, several risk factors threaten to slow its momentum. Some of those key challenges are regulatory and geopolitical uncertainty, since Spain’s M&A activity remains vulnerable to shifting regulatory frameworks, both domestically and across the EU, potential tariffs from third countries that might disrupt cross-border deals, and potential macroeconomic and financing volatility. In connection with this, the following should be considered:

• In Europe, growth is expected to recover to slightly above 1% as interest rates moderate.
• Interest rates in Europe are expected to fall further over the course of 2025, with the main refinancing rate expected to fall to around 2.5% or even 2% in the second half of the year.
• There may be changes to the regulatory framework such as new regulations on foreign direct investment, which may affect competition in the European single market.
• Corporate capital structures may be affected by significant investment needs in digitalisation and sustainability transition, as well as quantitative tightening by central banks.
• Geopolitical uncertainty may arise from international events, such as tariff increases derived from the commercial dispute between the EU and the USA, or the potential impact of an end to the Ukrainian war and any specific peace treaty terms.

M&A Market Trends in Spain in 2025

We have not seen any special new features in terms of the legal content of contracts or clauses different from those mentioned in previous editions of this report.

As we look ahead to the rest of 2025, we envisage that several significant trends will shape the M&A landscape, providing businesses with pathways for growth and adaptation, as outlined below.

Financial investors’ leading role

Greater macroeconomic optimism, the necessity to rotate portfolios and the recovery of fundraising processes point to a 2025 in which financial investors gain prominence, especially private equity and venture capital funds. The increasing role of these players is being fuelled by the positive economic forecast and the success of mid-market strategies, as well as the Spanish innovative ecosystem.

Likewise, family offices are expected to play a more important role in Spanish M&A practice during 2025, as they are focusing on new dynamics of wealth generation different from other investments, such as traditional real estate investments and bond and stock markets.

AI as a competitive necessity

During 2025, AI is expected to continue to be an accelerator of M&A processes, from target identification to post-acquisition integration. In addition, M&A practice will continue to benefit from the automated review of large documentation datasets and legal risk prediction or the search for anomalies in due diligence processes. AI technology is expected to continue its development, with more complex machine learning algorithms, an increase in pattern recognition and scaling to more complex tasks, thus increasing efficiency.

On the other hand, AI’s growing role in M&A processes introduces new potential pitfalls, including data privacy concerns and overreliance on tools that are still developing. The integration of AI tools will be a challenge in 2025 and will require balancing innovation with surveillance.

Advisers that do not invest in AI will be at a competitive disadvantage and will risk talent drain and operational inefficiency.

Review of M&A strategies

CEOs will become the main drivers of the M&A market in 2025, influencing it with strategies that prioritise strengthening market position or accelerating business transformation.

Defensive strategies to increase business resilience include optimising synergies, acquiring strategic competitors and entering into strategic agreements to strengthen competitive positioning in the market.

Offensive strategies to accelerate business transformation include revolutionising the business model to increase value proposition, considering expansion into adjacent markets through digitalisation, ESG and technology platforms, exploiting opportunities through strategic alliances with start-ups, or investing in disruptive and innovative assets in order to grow.

M&A Trends in the Main Sectors in 2025

Automotive

The automotive sector experienced a slowdown in M&A activity in Spain throughout 2024, mainly due to the crisis faced by major European original equipment manufacturers (OEMs). Reduced demand, overcapacity in Europe, uncertainty about the evolution of propulsion technologies, and the development and internationalisation of Chinese manufacturers caused a decrease in investors’ appetite. As a result, there was a reduction in both the number of transactions and their size.

In 2025, activity is expected to recover in more resilient sectors such as spare parts distribution and workshops (noteworthy transactions in 2024 included the acquisition of Aurgi by Mutua Madrileña and Recalvi by Abac Capital) or in high-value niches with a significant technological component (USA Group and P4Q in 2024). In addition, some consolidation is expected in the value chain between Tier 1 and Tier 2 operators, with the support of certain OEMs to ensure production, and the inorganic growth of large Spanish groups in countries such as India, Mexico, Brazil or China.

Banking

During 2024, the banking sector experienced a period of great activity. Banks beat their earnings expectations, the markets experienced a year of growth, and the lowering of interest rates together with the containment of inflation improved the outlook for the real estate and institutional investor sectors, which are so important for the banking sector. In this context, the purchase offer presented by Banco Bilbao Vizcaya Argentaria, S.A. to the shareholders of Banco de Sabadell, S.A. is of particular significance, the outcome of which is still uncertain at time of writing. If the offer is accepted, the purchase will result in the second Spanish bank by size, changing the current Spanish banking scene.

The prospects for the Spanish financial industry in 2025 are positive. The Spanish economy is growing, and financial institutions (banks, insurance companies and capital markets companies) are reporting very strong results, with record profitability.

Energy

During 2024, the energy sector experienced great activity linked to the energy transition, which mobilised investments of more than EUR15 billion. Spain positioned itself as one of the most attractive markets for investment in renewables globally.

It is worth highlighting certain transactions carried out by Spanish companies such as Endesa, Repsol and Iberdrola, which consisted of allowing one or several institutional investors to invest in their renewables business, as well as transactions linked to asset rotation programmes followed by companies such as Iberdrola and Acciona Energía.

The main challenges for 2025 will be, among others, formulating an appropriate regulatory environment for continued investment in renewables by simplifying and streamlining the processing of authorisations, licences and permits, and developing and incentivising new technologies, such as renewable gases, electric vehicles and data centres.

2025 looks set to be a good year for energy transactions in Spain. The fulfilment of decarbonisation goals for 2030, the possibilities for the construction of data centres and the need to guarantee a constant and sustained energy supply level, and the expectation of national and European public funds aimed at the exploration and development of new technologies, among other considerations, lead to optimism for 2025.

Government and public services

Throughout 2024, there was an increase in operations relating to public sector entities, with the aim of adjusting their public nature to their operational needs, to enable their intervention in the private market. One important operation in 2024 was the creation of an international association by Enaire together with other European air operators to obtain better market conditions by acting jointly.

This growth is expected to continue in 2025, so that public entities can jointly acquire goods and services in the private market, both nationally and internationally, thus rationalising and optimising public spending.

Tourism and hospitality

The tourism and hospitality sector has continued its positive evolution in Spain, consolidating itself as the main growth engine of the Spanish economy, and maintaining the very high interest of both national and international investors aligned with the positive performance of M&A processes in Spain.

The largest volume of investments in the tourism and hospitality sector has been concentrated in the hotel industry, which can be linked to its excellent performance in terms of growth, both in occupancy and in average daily rates. However, a situation of greater demand than supply of available assets was observed, which, linked to the increase in real estate prices in Spain, may mean a challenge in the medium term.

Looking to the future, the tourism and hospitality sector is expected to continue growing, with two elements that will shape the evolution of the sector: (i) a trend towards concentration, both in size and vertically along the global industry value chain; and (ii) a drive towards industry transformation that means an evolution of business models, especially in the hotel sector, where large international operators are evolving their business models. These two elements – concentration and transformation – form the context for the development of M&A transactions during 2025.

Life sciences and healthcare

In 2024, activity in the life sciences and healthcare sector began to show signs of recovery, with an increase in the number of transactions closed compared to 2023. Nevertheless, there were some very important transactions that did not materialise due to discrepancies over valuations, such as Brookfield’s takeover bid for Grifols or the sale of Rovi’s manufacturing division to third parties. Despite this, the sector continues to be attractive to national and international investors.

The industry faces major challenges, including the need to redefine the public-private partnership model to improve the efficiency and sustainability of the system, the implementation of new technologies, and adaptation to the changing regulatory environment (eg, the new Medicine Law and sustainability regulations).

Contract research organisations, contract development and manufacturing organisations, active ingredient manufacturers and medtech companies are expected to remain the focus of industrial and financial investors during 2025.

Real estate

The market noticed a reactivation in 2024 that can be expected to be maintained in 2025. Ongoing legislative changes, the evolution of interest rates and other macroeconomic variables (especially those of a financial nature) will be important factors in consolidating such expected growth. Growth in 2025 is expected to be concentrated in certain sectors such as data centres and AI-related initiatives.