France – Resilience amid uncertainty

Deal trends

In line with previous years, deals continued to take longer to execute with increased due diligence, more complex structuring and additional regulatory and deal specific conditions precedent. 

The development of W&I insurance continues to be a trend in French M&A, but the uptick in use of the tool has been less than expected in 2024.

Meanwhile, foreign direct investment continued to be an important aspect of French M&A over the year, though the regulations themselves were largely stable compared to previous years (a stated objective of the French government, with the aim of encouraging foreign investment). The importance of foreign direct investment review was exemplified in 2024 in the heated national political debate around the acquisition by the US private equity firm Clayton Dubilier & Rice of a large stake of Opella, the manufacturer of the ubiquitous paracetamol brand Doliprane, from Sanofi. Another good example in 2024 of heightened focus on foreign investments was the reaction to the potential substantial increase of the stake held by China's Tencent in the troubled French video game developer Ubisoft. When the activities in question have been deemed strategic enough, the French state has even shown that it is ready to acquire the asset itself, as was the case in 2024 with the acquisition of ASN the submarine cables specialist from Nokia or the supercomputer activity from Atos in the context of its financial restructuring. 

Outlook for 2025

Challenges that made 2024 a year of ups and downs will likely continue into 2025, in particular political instability, budgetary challenges, high government debt levels and the deterioration of France’s credit rating. This will likely continue to lead to a withdrawal of government backing from certain projects. 

However, the market appears to be growing more resilient to political turmoil and geopolitical curve balls, and strong fundamentals can be expected to drive the M&A market in 2025. These fundamentals include reducing interest rates, the reopening of debt markets, the gradual but real realignment of price expectations between sellers and buyers and the pressing need for private equity houses (prompted by their LPs) to release held up assets to the market. 

A number of deals which were pulled in 2024 are also expected to come to market again in 2025. A good example of this is Biogaran, the generic medicine producer, which Laboratoire Servier failed to sell in 2024 (among other reasons because it failed to secure an acceptable buyer for this type of activity). 

M&A off the back of restructuring is also expected to pick up in 2025 as difficult cases like the financial restructuring of Atos continue to arise. The trend of large companies carving out non-core assets should also fuel a number of deals over the next year. 

This leads many dealmakers to have a cautiously optimistic view of the M&A market in France in 2025. Sectors that are particularly expected to see rising deal activity are the fintech as well as healthcare.