The global M&A market went through a sharp contraction cycle in 2022-2023, driven by the pace of monetary tightening: the ECB raised interest rates ten consecutive times from July 2022 to October 2023, taking the reference rate from 0% to 4.5% — the highest level in the euro's history. The impact on the M&A market was immediate: valuation multiples compressed, leverage in LBO transactions fell sharply, and the gap between sellers' and buyers' price expectations widened to the point of paralysing many negotiations.
The 2024 recovery: data and analysis
The recovery of the M&A cycle in 2024 was faster than most analysts anticipated. The factors explaining the rebound are:
The ECB’s rate-cutting cycle (June 2024): the ECB’s first rate cut in June 2024 was the starting signal for private capital. The 12-month Euribor fell from 3.9% in January 2024 to 2.5% by year-end, significantly reducing acquisition debt costs.
Sellers’ adjustment of expectations: after two years of a depressed market, business owners and funds seeking to sell understood that waiting to recover 2021 multiples was not a viable strategy. The adjustment of expectations unblocked the deal pipeline that had been building up.
Record dry powder from private equity funds: private capital funds had closed capital rounds in 2021-2022 with significant investment commitments. With deployment deadlines approaching, the pressure to invest became urgent, accelerating deal activity across the European market.
According to TTR Data, the Spanish M&A market recorded a total of 3,847 transactions in 2024 with a value of €52.3 billion, representing 23% growth in value versus 2023. By sector, technology (25% of total value), health (18%), energy and utilities (22%), and infrastructure (15%) accounted for more than 80% of volume.
Deal size analysis
The Spanish M&A market operates across three segments with distinctly different dynamics:
Large cap (over €250 million)
Major transactions returned to headlines in 2024-2025: mergers between energy utilities, banking consolidation accelerated by high-profile transactions among major Spanish banks, and infrastructure acquisitions by international pension funds. In this segment, the protagonists are corporate strategic buyers and infrastructure funds. Multiples range from 10x to 18x EBITDA depending on the sector and asset quality.
Mid-market (€20 million to €250 million)
This is the most dynamic segment and the most relevant for the Spanish business fabric. National private equity funds (MCH, Portobello, Miura, Nazca, Springwater) and international funds with Iberian mandates operate here, alongside large corporate groups pursuing add-on acquisition strategies. The most active sectors in 2024 were IT services, healthcare, food and beverage, and specialised industrial services. Multiples ranged from 7x to 14x EBITDA depending on the sector and revenue recurrence.
Small cap (below €20 million)
The small transaction segment has a different buyer structure: acqui-hires of technology companies by larger corporates, family successions formalised through the entry of a financial partner, and MBOs (management buy-outs) with ICO or debt fund financing. This segment is the least visible statistically but the most numerous in transaction count.
Structural trends defining Spanish M&A in 2025-2026
AI as a driver of premium valuations
Artificial intelligence has become the most pervasive topic in M&A conversations. Companies that can demonstrate AI is a central element of their competitive advantage — whether in their products, operational processes, or analytical capabilities — command significant valuation premiums over comparable companies that have not integrated AI into their business model.
This differentiation is most significant in sectors such as software, financial services, healthcare, and logistics, where AI is already generating measurable competitive advantages. In more traditional sectors, the application of AI to processes — automation, inventory management, predictive maintenance — is becoming a hygiene factor (something the buyer expects the company to have begun implementing) rather than a premium differentiator.
ESG as a due diligence criterion
The integration of ESG (Environmental, Social and Governance) factors into M&A due diligence processes has moved from an emerging trend to standard practice among international private equity funds and corporate buyers with public sustainability commitments.
In practice, this means target companies must be prepared to respond with data to questions such as: what is the carbon footprint of operations? Is there a certified environmental management system (ISO 14001)? What is the workplace accident frequency rate? Is there a whistleblower channel compliant with Law 2/2023? What are the corporate governance practices? Companies that cannot answer these questions with reliable data are not necessarily excluded from transactions, but they face valuation discounts or must commit to a post-acquisition improvement plan, which reduces the net price received by sellers.
Cross-border consolidation: Latin America-Spain flows
A trend that has intensified in 2024-2025 is the reverse M&A flow: Latin American companies (Brazilian, Mexican, Colombian) acquiring assets in Spain to gain presence in the European market. Spain acts as a gateway to the EU for Latin American groups in retail, financial services, and technology that seek geographic diversification and access to the single market.
The M&A regulatory framework: what changes in 2025-2026
Merger control (CNMC and DG Competition): the mandatory notification threshold for Spain’s competition authority (CNMC) remains at the level established by Article 8 of the Competition Defence Act: market share exceeding 30% in the relevant Spanish market, or where the turnover of at least three parties exceeds €240 million in Spain. For operations of European scope, the thresholds of Regulation (EC) 139/2004 (ECMR) apply in place of national thresholds.
Foreign Subsidies Regulation (FSR): Regulation (EU) 2022/2560 on foreign subsidies has introduced a new notification obligation for concentrations involving companies that have received subsidies from non-EU countries exceeding €50 million. The European Commission can investigate and block transactions if foreign subsidies distort competition in the internal market.
Foreign investment screening: Spain maintains the foreign investment control mechanism introduced by Royal Decree-Law 8/2020 and expanded by Law 19/2003. Investments from non-EU/NATO countries in strategic sectors such as defence, energy, critical infrastructure, telecommunications, and healthcare require prior authorisation from the Council of Ministers from a 10% capital threshold.
Valuations in 2025-2026: the return of quality differentiation
The valuation market in the 2025-2026 cycle is characterised by growing differentiation between high-quality and mediocre businesses — a trend that has intensified since the 2022 cooling. Investors learned during the high-interest-rate cycle that paying high multiples for businesses without clear competitive advantages destroys value, and have adjusted their selection criteria accordingly.
The factors that justify a valuation premium in the current market are: revenue recurrence (multi-year contracts, SaaS, monthly recurring revenue), demonstrated barriers to entry (intellectual property, network effects, switching costs), sufficient scale to compete in the niche (market leadership, not merely participation), a management team with a track record and depth (no founder dependency), and solid and sustained organic growth trajectory.
At BMC our corporate strategy team advises on M&A transactions across all sectors and sizes. See our corporate advisory services.
