The M&A Acceleration in 2025
Is Deal Activity Sustainable, or Are We Seeing a Bubble?
2025’s surge in mergers and acquisitions is real, and space is riding the wave—but not all of it looks equally durable. Parts of the market, especially defense‑ and infrastructure‑anchored deals, rest on solid cash‑flow and policy foundations, while a thinner layer of high‑multiple, story‑driven transactions in commercial space is starting to show the outlines of a mini‑bubble that could be tested in 2026–2027. The right way to read 2025 is not “boom or bust,” but a segmented market where rational consolidation and speculative pricing are unfolding on top of each other.
The great M&A rebound and where space fits
Across the global economy, 2025 has marked a powerful rebound in dealmaking. Global M&A deal value is projected at about 4.8 trillion dollars, a roughly 36 percent jump from 2024 and the second‑highest annual total on record, with average valuations around 11.6x EV/EBITDA—one “turn” higher than 2024 but still below the 2021 peak. Dealmaking has broadened beyond mega‑cap tech into more traditional industries and national‑security‑sensitive sectors, including aerospace, defense, and space, as buyers race to lock in strategic positions they fear may not be available in a few years.
On a recent edition of The Journal of Space Commerce podcast, AE Industrial Partners Managing Partner Kirk Konert said that things have changed since that peak of merger and acquisition activity. “So you saw, what I thought was a healthy symptom of that, which was; strong space companies survived and got stronger. The companies that probably had great ideas, great technologies but didn’t have business models that were enduring, those technologies got absorbed by other companies that were stronger,” Konert said. “And then out of that you saw a process of the strong companies coming out of that malaise in valuation, to a point where now we’re seeing pretty much recovery in 2025 and beyond to those pre-2021 days, where there’s been an extreme interest from investors and institutional investors to invest in the defense/space-tech market.”
Within that rebound, air, land, sea, and space (ALSS) systems have been stand‑out contributors. One 2025 update from Capstone Partners reports ALSS deals up about 35 percent year‑over‑year to roughly 73 announced or completed transactions, even as other sectors are only just clawing back toward pre‑2022 levels. Space sits at the intersection of these forces—both as a direct target of acquisition and as an enabler of broader defense, communications, and data strategies.
Inside the 2025 deal wave: smaller, more numerous, more strategic
If 2021’s deal environment in space and aerospace was defined by lofted expectations and plentiful cheap capital, 2025’s M&A wave looks more like a high‑tempo, mid‑market roll‑up. In ALSS, average deal size dropped from just under 1 billion dollars in 2024 to roughly 375 million dollars in 2025, while the share of middle‑market deals climbed from around 64 percent to about 75 percent of volume. That pattern—more deals, smaller checks—suggests buyers are prioritizing targeted capability acquisitions over headline‑grabbing megamergers.
