Prolonged political instability is causing mergers and acquisitions (M&A) activities in France to stagnate. Accordingly, mergers and acquisitions (M&A) between domestic businesses decreased sharply, while US and UK investment funds became increasingly uninterested in the French market.

Nearly 18 months after the French National Assembly election ahead of schedule, the country's M&A market has not yet fully recovered. The number of deals in France continues to be less than in other European countries. Deals between domestic businesses have decreased by nearly 44% since the beginning of the year. Although the recent political crisis has not paralyzed all activities, it has also increased the hesitation of foreign investors.

According to Mr. Laurent Bensaid, a consultant at the law firm King & Spalding, "since the dissolution of Parliament, many Western investment funds have become more cautious with French businesses, and this trend has become more evident in recent weeks."

While financial funds are cautious, international corporations still maintain a certain interest. According to data. According to statistics company LSEG, acquisitions of French businesses by foreign corporations increased by 7% in the first 9 months of the year, helping France continue to be one of the leading destinations for international investment capital flows in Europe. However, experts warn that the situation could reverse if the 2026 budget is not approved before the end of the year, especially in sensitive areas such as cybersecurity and energy.g, infrastructure and healthcare, which need a stable political environment.

On the contrary, deals between domestic businesses have plummeted, down nearly 44% since the beginning of 2025. The reason is due to prolonged difficulties in the private investment capital market, a 20% decrease in the number of transactions carried out by financial funds, along with the fear of small and medium-sized enterprises facing political instability and danger. opportunity to change tax policy. Mr. Bensaid said: "Many business owners had planned to sell their companies or find strategic investors by 2026, but from September until now, most have decided to postpone their plans due to lack of clear vision."

According to Mr. Matthieu Pigasse, CEO of consulting firm Centerview Partners, the M&A market is difficult.he stopped completely but had "become stiff and risky". He said many M&A projects take longer than usual or are canceled midway. He said: "Over the past 18 months, we have seen a trend of waiting and caution spreading among businesses, due to concerns about the impact of international factors such as tariff policy, unpredictable decisions of the US government or the consequences of war in Ukraine."

According to analysts, French businesses are looking for ways to reduce their dependence on the domestic market, where political and legal risks are present. increasingly larger. The US is still the priority destination, but India, Asia and Latin America are also returning to the investment map. Expert Jean-Baptiste Charlet of Morgan Stanley bank commented: "Large corporations cannotStanding still in a world full of uncertainty. They are forced to expand and diversify."

Mr. Pigasse added that "the world is entering a period of re-regionalization, where national interests and political factors increasingly dominate cross-border deals". However, experts still see the current period as a period of adjustment, not recession. Mr. Cyril de Mont-Marin, representative of the bank Rothschild, concluded: "Bank and bond capital sources are still available, and many large French corporations are preparing for new deals."

Source: VTV