Southeast Asia and East Asia are bright spots for global merger and acquisition ( M&A ) activity, driven by robust domestic private equity ( PE ) momentum, a surge in private credit and the increasing integration of artificial intelligence ( AI ) into deal strategies, according to a recent report

In South and Southeast Asia, 50% of respondents cite digital transformation as a primary motivator for M&A, underscoring a push to acquire technologies that modernize operations and business models, finds global law firm Norton Rose Fulbright’s Global M&A Trends and Risks report, which was produced in partnership with Mergermarket and is based on a survey of 200 senior executives from corporates, private equity firms and investment banks conducted during the first half of 2025.

In East Asia, the top driver was the launch of new products and services, cited by 75% of respondents, the highest percentage across all regions. AI is a central focus, with many firms actively seeking to acquire AI businesses.

Vertical integration is also taking centre stage across Asia. Companies are increasingly pursuing deals to bring key suppliers and distributors in house, particularly in sectors like manufacturing and electronics.

“Industrial security is going to be an issue for everyone,” notes Raj Karia, the law firm’s global head of corporate, M&A and securities. “All big economies are reverting to having their own critical industry and infrastructure.”

In Southeast Asia, local PE firms are showing a strong appetite for mid-market opportunities, while larger international funds are selectively targeting bigger acquisitions in East Asia. Respondents expect PE buyouts and growth investments to dominate, whether it’s family business buyouts in Southeast Asia, carve-outs in Japan, or growth capital into Indian tech start-ups.

Indeed, PE buyers, both domestic and international, are seen as key acquirers across Asia. This aligns with expectations that 49% of domestic PE players in emerging Asia and 41% of international PE firms in East Asia, according to the report, will remain active in the market.

Private credit is also poised for expansion. In South and Southeast Asia, 58% of respondents foresee significant growth in the private credit market, supported by the entry of new lenders offering greater flexibility than traditional banks.

Another development gaining traction is the use of representations and warranties insurance. In South and Southeast Asia, 45% of respondents anticipate a “significant increase” in deal insurance usage in 2025, one of the sharpest upticks globally.

At the same time, regulatory pressures are intensifying. In East Asia, 60% of report respondents flag anti-trust scrutiny as a leading barrier to M&A, while in South and Southeast Asia, 48% cite foreign investment and subsidy regulations as key hurdles.

Despite the headwinds, the report paints a picture of resilience. Rather than pulling back, Asian dealmakers are adjusting strategies to suit the evolving landscape. Notably, 28% of Asia-based respondents say they have an increasing appetite for M&A deals, the highest positive sentiment among all global regions.

This suggests that many Asian corporates view global disruption not as a deterrent, but as an opportunity, particularly in targeting non-US assets.

“Japanese outbound M&A is incredibly strong,” points out Craig Loveless, a partner based in Singapore. “There’s a lot of M&A within Asean [the Association of Southeast Asian Nations region] that isn’t going to be affected by what happens in the US.”

The regional pivot is underscored by a PE executive in China cited in the report who states: “Our interest in the US market is diminishing, but there are many more geographies where targets are looking very attractive.”