Anticipated Tariff Headwinds for Global M&A Activity
The global mergers and acquisitions (M&A) landscape has encountered significant turbulence in the first quarter of 2025, primarily due to the recent implementation of broad tariffs by President Donald Trump. These tariffs have introduced uncertainty and volatility into the market, leading to a notable decline in deal-making activities.
Impact on M&A Activity
In the United States, M&A volumes have decreased by 13% to $436.56 billion in the first quarter. This downturn is largely attributed to the apprehension surrounding the new tariff policies, which have made companies hesitant to pursue mergers and acquisitions amid an unpredictable economic environment.
Global Deal Activity
While the Asia-Pacific region experienced a surge in M&A activity, driven by several large state-run deals in China, the overall global sentiment remains cautious. The uncertainty stemming from the trade war has led to a 17.7% decline in the number of new stock offerings, despite a 4.1% increase in their value to $160.22 billion.
Investment Banking Revenues
The decline in M&A activity has directly impacted investment banking revenues. Globally, fees have fallen by 4.9% to $21.47 billion compared to the same period last year. Analysts have begun adjusting earnings forecasts for major banks involved in M&A advisory services, reflecting concerns over the prolonged slowdown in deal-making.
Looking Ahead
The current environment underscores the importance of strategic agility and informed decision-making. Businesses and investors should closely monitor policy developments and market responses to navigate the challenges posed by the ongoing trade tensions. Engaging with financial advisors and staying abreast of economic indicators will be crucial in making informed decisions during this period of uncertainty.
Source: Reuters, “Global deal activity disappoints, M&A revenue falls as Trump pursues tariffs,” April 1, 2025., https://www.reuters.com/markets/deals/global-deal-activity-disappoints-ma-revenue-falls-trump-pursues-tariffs-2025-04-01/