AI Deals in 2025: Key Trends in M&A, Private Equity, and Venture Capital

Artificial intelligence encompasses the capability of machines and computer systems to execute tasks that typically require human intelligence, including learning from data (machine learning), understanding and generating natural language, recognizing patterns (computer vision), decision-making, and adapting over time. AI technologies and applications are diverse and, as the 2025 AI deal market exhibited, are being applied across numerous sectors, notably healthcare, financial technology, and manufacturing.

INVESTMENT TRENDS

In the third quarter of 2025, $17.4 billion was invested in applied AI, marking a 47% increase year over year. Projections suggest that spending on agentic AI could reach $155 billion by 2030. The focus has shifted from developing large language models (LLMs) to integrating AI into workflows. Investors are prioritizing startups that demonstrate traction in enterprise adoption, with deal terms emphasizing integration over innovation.

SIGNIFICANCE

AI now accounts for more than 50% of global venture capital funding, with mega-rounds significantly influencing venture economics. The resurgence of acqui-hires, along with considerations of intellectual property and compute access, is reshaping strategic approaches. The complexity of due diligence and emerging legal risks necessitate tailored solutions and specialized deal structuring.

KEY TAKEAWAYS

• AI Is Dominating Capital Flows
  • More than 50% of global VC funding in 2025 was directed to AI
  • Driven by foundation models, infrastructure, and applied AI solutions
• Mega-Rounds
  • Investment is concentrated in fewer companies with larger raises; pre-product deals are back
• Acqui-Hires and Talent Wars Are Resurgent
  • Strategic buyers use M&A as a hiring strategy; talent retention clauses are now core to deal structuring
• Unique Legal and Diligence Issues in AI
  • Data provenance, model IP, compute access, and explainability are central diligence and negotiation points
• Structuring Is Adapting to New Risks
  • Enhanced founder controls (dual-class shares, estate matters) reflect the evolving risk/reward profile
• Investor Expectations
  • Investors seek side letters with rights for notice, tag-alongs, and regulatory matters
• Expect More Complexity, Not Less
  • Legal, regulatory, and technical due diligence requirements increasingly require specialized counsel
• The AI Deal Market Is Still Maturing
  • Despite record volumes, both PE and strategic buyers are pacing selectively as AI business models evolve

Thus far, the 2025 AI deal market has been characterized by significant growth and evolving investment strategies, with AI now commanding more than 50% of global VC funding. The market is witnessing a shift toward integrating AI into enterprise workflows, with a notable increase in mega-round investments and a resurgence of acqui-hires as strategic hiring strategies.

As the AI sector matures, the complexity of legal, regulatory, and technical due diligence is increasing, necessitating specialized counsel and tailored deal structuring. Looking forward, stakeholders should anticipate continued evolution in AI business models and investment strategies, with a focus on addressing unique legal and diligence challenges.