The M&A market in the Nordic region has remained resilient in recent years, despite a general fall-off in global deal flows post-2021.
In fact, not only did M&A activity in Nordic countries increase year-on-year in 2024, but it exceeded growth both in the EMEA region and globally, aligning it with a wider trend of greater corporate and private equity-backed dealmaking activity and positioning the region for further growth in 2025.
As the KPMG Nordic Deal Trend Report Q4 2024 observed, although combined deal value in Nordic countries was down last year on 2021 and 2022 totals, it increased considerably from 2023 to 2024, to around EUR166 billion in total – averaging EUR41 billion per quarter, compared with EUR36 billion per quarter in 2023.
However, similar analysis by Goldman Sachs found that while growth in the number of larger deals ($500mn+) in the Nordics from 2023 to 2024 was slightly higher when compared with the EMEA region, mega-deals ($20bn+) were conspicuously absent for the third year in a row. Uncertainty surrounding tariffs also has the potential to impact M&A activity across the region.
That said, there is clear sentiment from investors and advisors alike that M&A activity will pick up in the region in 2025 and bigger deals may return to the market later in the year, with a significant pipeline of stalled transactions and substantial investment capital waiting in the wings.
Increase in insurable transactions
While sponsor-backed deals have been at historic lows in the Nordic region, private equity investors are currently sitting on reserves of capital that they are keen to deploy.
In the interim, corporate transactions have been noticeably more prominent in the Nordic M&A market in 2024, accounting for many of the largest deals in 2024.
This indicates a belief among industrial and corporate players looking to expand their businesses that there are strong investment opportunities in the region for those with capital to deploy.
At the same time, a relatively high proportion of deals in the Nordic region have involved the delisting of public companies via private M&A deals. These public-to-private deals provide a key entry point for sponsors to the M&A space, suggesting this could be a driver for private equity money to return to the market in 2025.
This also highlights a key opportunity for the W&I insurance market, as an uptick in private transactions increases the proportion of insurable deals.
A strong market for innovation
Recent geopolitical tensions, such as Sweden’s move to take up full NATO membership, and actions by the Swedish, Finnish and Norwegian governments against suspected sabotage of subsea infrastructure, might have been expected to make investors hesitant about involvement in the region.
However, Nordic economies have exhibited continued resilience to a range of external pressures in 2024, from these geopolitical disturbances to rising interest rates and wider financial uncertainty.
In investment terms, the M&A market in the Nordic region has consistently held strong positions in the tech sector, pharmaceuticals and traditional industries – a dynamic which has held with 2024 deal activity and looks set to continue in 2025.
The region’s strong focus on innovative business sectors, coupled with strong national regulatory frameworks and sound economic strategies have provided a stable environment for M&A which is likely to prove attractive to investors in the year ahead.
Buyers’ market dynamics
With a buyers’ market for M&A currently, negotiating positions in the transaction process have shifted slightly. Advisors have had more time for comprehensive due diligence around buyers’ investment opportunities, with the ability to push sellers harder on pricing and negotiate contractual protection under share purchase agreements (SPAs).
As deal activity picks up and time pressure on transactions increases, buyers may lose some of these advantages. This could impact how much time is spent on due diligence and will also have a bearing on risk assessment by W&I underwriters, which will ultimately drive risk-adjusted pricing.
While we have seen a stronger push for sellers to offer specific indemnities in an SPA in the past year, compared with the preceding 2-3 years, as we move into more of a sellers’ market this this negotiation power might slip away from buyer, leaving them more exposed.
Growing W&I appetite
Pricing of W&I insurance is highly favourable at present for buyers in the Nordics, with many insurers offering clean terms for coverage amid a highly competitive environment.
With an acceleration in deal activity, we anticipate a hardening of W&I market conditions and a corresponding uptick in pricing and contraction in the broad terms being offered.
This dynamic will make access to a sustainable W&I offering even more important for clients – particularly if some carriers respond by reducing capacity or pulling out of the market entirely.
Acquirors will increasingly be looking for a broader offering that encompasses the options of tax liability and W&I insurance. In recent months, we have also seen increasing requests for affirmative insurance cover for identified risks in the scope of a transaction process.
Working with an insurer who is here for the long term and who can offer a significant line size, global capabilities and a comprehensive product suite will be a key differentiator as the anticipated upturn in Nordic M&A activity gathers pace.
