France is currently weathering a political storm, with the government effectively paralyzed since last summer’s inconclusive snap election. Indeed, President Emmanuel Macron’s approval rating has sunk to a record low of 11 percent, according to one recent survey. Meanwhile, the newly installed Prime Minister Sébastien Lecornu narrowly survived two no-confidence votes in October, leaving the government in a precarious position.
Against this unstable political backdrop, France’s economy grew faster than expected in Q3, on the back of healthy export activity. The upturn suggests the economy is relatively insulated against political headwinds.
But the country’s long-term economic outlook remains uncertain. GDP growth is forecast at 0.9 percent in 2026, slightly below the eurozone average of 1.1 percent.
M&A and PE data and deals
Despite this uncertainty, M&A on both the strategic and sponsor side has remained relatively stable. A total of US$60.6 billion of deals changed hands during the first nine months of the year. This marks a marginal decrease from the US$67.8 billion of deals announced during the same period in 2024. Meanwhile, and in line with global trends, deal volume decreased by 14 percent over the same period. However, at the time of writing (November 18), deal value had risen to US$97.5 billion, marginally above the figure for the whole of 2024 (US$97.4 billion).
This activity is more impressive given the impact on international markets of President Donald Trump’s “Liberation Day” announcement, which resulted in a sharp drop off in M&A activity during the second quarter. The fact that aggregate value is on course to be on a par with 2024 is testament to the resilience of the French dealmaking market.
The largest deal of the year was Bouygues, Iliad and Orange’s US$19.7 billion bid for a large part of Altice-owned operator SFR's assets. Altice subsequently rejected the deal, but the acquirers said in a joint statement that they noted the rejection and stood by their offer. The offer for the assets from France's second largest telecom operator would leave the French telecom market with only three operators. As a result, the deal would likely face regulatory scrutiny.
EU regulators have historically taken a tough stance against telecom deals in a bid to safeguard competition and pricing. However, a recent EU report has urged regulators to ease their stance and help businesses gain scale in the face of international competition, particularly from the US and China. The report states that consolidation will result in stronger players able to invest in network infrastructure, enabling local players to take on international rivals. The outcome of the deal could prove a defining moment for the French telecom sector.
The consumer sector has also produced several big-ticket deals this year, including Kering’s US$4.7 billion sale of its beauty unit to L’Oréal. The sale is the first step by the newly appointed CEO Luca De Meo to address investor anxiety at high debt levels.
Local private equity players have also been active, as evidenced by Ardian’s US$2.5 billion acquisition of renewables company Akuo. The deal will add 1.9 GW of solar and wind energy capacity to Ardian’s portfolio. Buyout firms have continued to invest heavily in 2025 despite the ongoing macroeconomic uncertainty. A total of US$31.9 billion was spent in the first three quarters of the year—a 6 percent increase year on year.
Distress drives deals and outbound abounds
Distressed dealmaking is on the rise across Europe and is a trend set to drive French M&A over the coming year. Cash shortages, rising borrowing costs and weak investment are all putting pressure on businesses, while consumer confidence is at a two-year low.
Trump’s recent tariff announcements are placing even more pressure on French businesses. According to consultancy Alvarez & Marsal, 32 percent of European companies had fragile balance sheets even before the latest set of tariffs was introduced—the highest proportion since 2021.
France’s consumer-facing industries are most at risk due to shifting consumer habits, rising costs and consistently tight margins. Legacy brands—traditionally insulated from distress—are now being targeted by turnaround investors. One example is Le Coq Sportif. The household sportswear brand was recently sold to Franco-Swiss investor Dan Mamane, who will undertake a €70 million (US$82 million) recapitalization and a relaunch of the business.
At the other end of the spectrum, businesses with healthy balance sheets are becoming less risk averse when investing overseas. Two bold cross-border deals were announced in June: the US$9.1 billion acquisition of US-based Blueprint Medicines by French healthcare giant Sanofi, and French banking group BPCE’s proposed €6.4 billion (US$7.4 billion) acquisition of Novo Banco, Portugal’s fourth largest bank. Both deals highlight growing confidence among French companies to expand strategically outside of their borders.
Despite the uncertain political outlook, France also remains a key destination in the EU for foreign investment. Ongoing political uncertainty and high valuations in the US are pushing investors to look for more stable and attractively priced dealmaking opportunities in Europe.
Challenges on the horizon
French assets remain sought after by foreign investors. According to EY's Baromètre de l'Attractivité de la France 2025 report, the country retained its title as the leading European investment destination in 2024.
Yet ongoing geopolitical tensions and tighter regulation threaten to derail progress, with French foreign direct investment (FDI) screenings on the rise. A recent report published by FDI authorities highlights an increase in the number of screenings, as well as the number of deals cleared with conditions, particularly targets involving R&D activities.
Essential services such as energy, water, telecommunications, transportation and public health, as well as strategically sensitive sectors such as defense, cryptology, dual-use goods and R&D on critical technologies, are receiving specific focus from authorities, which could pose a challenge for dealmakers moving forward.
In addition, French M&A is not immune to geopolitical shocks. This vulnerability was displayed in the sharp drop-off in activity witnessed in Q2 following Trump’s announcement in early April of tariff increases across the globe. Following a strong first quarter, aggregate M&A deal value targeting French companies dropped by 70 percent, reaching lows not seen since the early stages of the COVID pandemic.
While the US administration has softened or delayed many of its proposed tariffs, ongoing uncertainty in the market will continue to weigh on dealmakers’ minds. Trade risks will increasingly need to be factored into M&A planning.
Cautious optimism in uncertain times
French dealmakers will retain faith in the country’s strong track record and wealth of experience as they face the uncertainties of the future.
France boasts a strong mix of corporate and PE players across a range of sectors. According to Datasite’s EMEA HY 2025 Deal Drivers report, French dealmakers rank as the third most active bidders for European deal targets, by volume, after the UK and US. Meanwhile, home-grown firms Ardian, PAI Partners and Sagard ranked among the ten most active private capital firms by volume in EMEA. With this amount of talent fueling activity, French dealmaking should remain active in the face of macroeconomic volatility.
