Expected M&A Wave Waits for Trump Trade Deals
Tariff-induced uncertainty and related market jitters stalled what was expected to be a rebound year for mergers and acquisitions.
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Coffee’s for closers, and few are willing to pour the java until President Trump takes the first sip.
Tariff-induced uncertainty and related market jitters have stalled what was expected to be a rebound year for mergers and acquisitions, and dealmakers are now reportedly eyeing the second half of 2025 to resume talks.
Make M&A Great Again
Expectations for a revival in M&A activity were heightened in late 2024/early 2025, with dealmakers and industry experts believing that Trump 2.0 would set the stage. An easing regulatory environment would help drive volume and entice financial sponsors to sell older private equity-owned assets so that they can return capital to their investors.
“Two key drivers will be increased activity from financial sponsors selling companies and a more favorable antitrust environment,” Tom Miles, co-global head of M&A at Morgan Stanley, said in a 2025 outlook report published in January. Inflation and interest rates remained wild cards but were moving in the right direction (down) at the start of the year.
The wilder card turned out to be trade policy — the unpredictability of on-again, off-again tariff hikes has eroded consumer and corporate confidence. Institutional loan issuance dampened and momentum behind initial public offerings (IPO) and M&A dissipated.
The number of acquisition announcements in the first quarter of this year declined to levels last seen in the third quarter of 2020 (the thick of the covid pandemic), according to PitchBook. However, the collective value of those deals, $485 billion, was about 15% higher than the 2020 period and showed a slight uptick from the fourth quarter of 2024:
- Elon Musk’s social media platform X’s tie-up with Musk’s AI startup xAI in an all-stock transaction valued the combined company at $113 billion.
- Cloud security platform Wiz found a buyer in Google, which agreed to acquire the company for $32 billion in an all-cash transaction expected to close next year. Both deals rank among the top 30 US transactions announced since 2020, according to PitchBook. They also show a continued appetite for AI.
Harshing the Vibes: Paraphrasing a McKinsey report that explains why trade policy would be disruptive to dealmaking: It’s hard to do math when the numbers keep changing.
