Global M&A activity hits decade low amid market decline

Dealmaking activity is much lower than expected this year, leading experts to rethink their predictions for a strong resurgence. The stock market has dropped, and there is considerable uncertainty stemming from the new Trump administration, which has made it harder for companies to proceed with mergers and acquisitions (M&A). So far this year, there have been about 6,600 announced global transactions. This is nearly a 30% decline compared to the same period last year and is the lowest number in over a decade. Financial experts had hoped for a rebound after the end of a downturn caused by interest rate hikes in 2022, but that has not materialized. As Wall Street had anticipated a “Trump bump” after the November elections, the reality has been different. Trump’s policies, such as increased tariffs and changes in regulatory oversight, have created obstacles for companies planning new projects or takeovers. Concerns about the U.S. economy have added to worries, with major stock indices experiencing declines. While the total value of announced takeover offers has risen by 14% to nearly $812 billion, this increase is largely driven by a few large deals. Notable transactions include Google's $32 billion acquisition of a cybersecurity firm and BlackRock’s $23 billion buy of a group of ports. Private equity firms are more active, as they are under pressure to make sales and return money to their investors. This segment of M&A has seen its value rise significantly compared to last year. However, the overall recovery in the M&A landscape is still slower than hoped. Most industry leaders indicate that although there is strong interest in potential deals, many companies are hesitant to finalize them. This cautious approach is causing delays in the expected recovery of the M&A market. Initial public offerings (IPOs) are also not bouncing back as quickly as predicted, contributing to a sense of stagnation in the market. Many businesses are still proceeding with IPOs, but the overall financial activity is still far behind levels seen in previous years. The slow pace of deals is prompting changes in hiring at major banks and law firms. While there is still a desire to bring in talented individuals, the hiring growth is stabilizing after an initial surge. With ongoing market volatility, both buyers and sellers are struggling to agree on prices, leading many transactions to be postponed until there is more clarity on regulatory policies.