As global markets navigate through uncertainty in early 2025, dealmakers are reassessing their expectations for a significant surge in mergers, acquisitions, and initial public offerings (IPOs). A combination of stock market declines, geopolitical tensions, and economic policy shifts under the Trump administration has contributed to a cautious investment climate. While some megadeals have buoyed the overall transaction value, the number of deals announced this year has significantly declined, marking the slowest start to a year in over a decade.
Slowdown in Global M&A Activity
Investment banking professionals had high hopes for a rebound in deal activity, especially after a period of stagnation caused by rising interest rates in 2022. However, the volume of global takeovers has increased at a much slower pace than anticipated. According to data from Dealogic, approximately 6,600 global transactions have been announced so far this quarter, representing a 30% drop compared to last year and a staggering 44% decline from the peak in 2021.
The anticipation of a so-called “Trump bump” in dealmaking has yet to materialize, as companies face hurdles in planning their strategic moves. Wall Street’s optimism, which progressed from spotting “green shoots” in 2023 to predicting “animal spirits” after Trump’s election victory in late 2024, has been tempered by growing economic and regulatory concerns.
Stock Market Uncertainty and Its Impact on M&A
The broader market has also been struggling, further dampening corporate confidence in executing deals. The S&P 500 is down nearly 4% year-to-date, reflecting investor concerns about domestic economic growth and corporate profitability. Declining stock valuations have made it more difficult for companies to pursue acquisitions, as lower share prices limit their ability to finance deals through equity.
Additionally, Trump’s push for increased tariffs and a shifting regulatory landscape have made corporations hesitant to commit to major acquisitions. New leadership in key antitrust and regulatory bodies has also added an extra layer of unpredictability, making boardrooms reluctant to finalize transactions.
A Select Few Megadeals Dominate Headlines
Despite the slowdown in overall deal volume, the value of announced transactions has increased by 14% year-over-year to nearly $812 billion. This rise, however, has been driven primarily by a handful of blockbuster deals:
- Alphabet’s (GOOGL) $32 Billion Acquisition of Cybersecurity Firm Wiz – Google’s parent company executed its largest-ever acquisition, emphasizing the growing importance of cybersecurity in the tech sector.
- BlackRock’s (BLK) $23 Billion Infrastructure Deal – The global asset management giant acquired numerous port assets, including two on the strategically crucial Panama Canal.
- Sycamore Partners’ Acquisition of Walgreens Boots Alliance (WBA) – The private equity firm took advantage of ongoing pressures in the retail pharmacy sector to strike a major deal.
Private equity firms have been particularly active, capitalizing on opportunities to deploy capital in an environment where many companies are under financial pressure. The value of financial sponsor-backed mergers and acquisitions reached $295 billion in early 2025, nearly doubling from $160 billion during the same period last year.
Regulatory Uncertainty Creates Hesitation
One of the biggest hurdles for dealmakers this year has been uncertainty surrounding regulatory policies. The U.S. Federal Communications Commission (FCC) recently signaled it could block deals involving companies with “invidious forms of [diversity, equity, and inclusion] discrimination.” Meanwhile, antitrust enforcers such as Gail Slater are expected to take a stricter approach to M&A activity, contradicting Wall Street’s initial expectations that Trump’s administration would be more business-friendly.
“There is always uncertainty when a new administration comes to power, but the uncertainty today is well beyond whatever I’ve experienced before,” said Jonathan Corsico, head of M&A at Simpson Thacher’s Washington DC office.
Cautious Sentiment Among Executives and Advisers
While interest in potential deals remains high, corporate executives and investment bankers are increasingly reluctant to pull the trigger. The sentiment among senior dealmakers suggests that although conversations about mergers and acquisitions are happening, the commitment to closing deals remains weak.
“The appetite to look at deals is strong, but the appetite to execute deals is not the same,” said Piers Prichard Jones, M&A partner at Freshfields. This caution reflects the ongoing macroeconomic and policy uncertainty, which continues to weigh on strategic decision-making in boardrooms across the globe.
IPO Market Faces Challenges
Alongside the M&A slowdown, the IPO market has also failed to meet expectations for a robust recovery. While some companies—such as CoreWeave, StubHub, and Klarna—are moving forward with IPO plans, the broader market remains tepid. According to data from the London Stock Exchange Group, IPO proceeds are only about 20% higher than last year, still far below the levels seen in 2021 and 2022.
Outlook for the Rest of 2025
Despite the current slowdown, some industry experts remain cautiously optimistic about a pickup in dealmaking activity as the year progresses. Evercore’s co-head of U.S. investment banking, Naveen Nataraj, believes that M&A activity will accelerate later in 2025, particularly as uncertainties surrounding trade and foreign policy begin to clear up.
However, with stock market volatility, tightening regulatory scrutiny, and shifting economic conditions, the road to a full recovery remains uncertain. Companies will need to carefully navigate these challenges while seeking strategic opportunities for growth and expansion.
