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Dealmakers are being forced to reassess expectations for a surge in activity this year, as stock market falls and policy uncertainty from the new Trump administration have held back takeovers and initial public offerings.
As the end of the first quarter approaches, the volume of takeovers globally has risen more slowly than many advisers expected at the end of last year when investment banking stocks hit record highs in anticipation of a “Trump bump”.
The number of deals announced since the start of January is the lowest in more than a decade, according to data from Dealogic. There have been about 6,600 global transactions announced so far this quarter, down almost 30 per cent on a year earlier and 44 per cent below the peak in 2021.
Wall Street has been trying to talk a dealmaking recovery into existence for two years after interest rate rises in 2022 killed off a pandemic-era boom. What started in 2023 as “green shoots” became “early innings” in 2024 and then “animal spirits” following Donald Trump’s victory in the US presidential elections in November.
Yet with Trump pushing up tariffs and a changing of the guard at global competition regulators, companies are having a hard time planning their next factory, let alone takeover.
US stock markets have been gripped by fears in recent weeks about the health of the domestic economy, with the blue-chip S&P 500 index down nearly 4 per cent so far this year.
The chair of the US Federal Communications Commission last week warned he could block deals from companies with “invidious forms of [diversity, equity and inclusion] discrimination”, while other antitrust officials such as Gail Slater are now expected to maintain a more vigorous approach to enforcement than Wall Street initially anticipated from the Trump administration.
“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, who leads the law firm Simpson Thacher’s Washington DC M&A practice.
The value of takeover offers announced has increased by 14 per cent on the same period last year, to almost $812bn, the Dealogic data show. But the increase in value has been driven in part by a handful of megadeals.
This month Google parent Alphabet announced its largest ever acquisition, a $32bn deal to buy cyber security firm Wiz; BlackRock struck a $23bn agreement to buy dozens of ports — including two on the Panama Canal — as Hong Kong-based seller CK Hutchison faced pressure from Trump; and buyout group Sycamore Partners agreed a deal for pharmacy retailer Walgreens Boots Alliance.
Private equity firms, which are under pressure to sell assets and return cash to their backers, have also increased their activity. The value of so-called financial sponsor backed M&A reached $295bn, up from $160bn in the same period last year.
Activity has fallen short of the marked recovery for which advisers had been preparing after two years of muted dealmaking.
“We are experiencing an understandable delay in the M&A recovery,” said Evercore’s co-head of US investment banking, Naveen Nataraj, although he added that the bank still expected “a more active M&A environment as the year progresses, particularly as trade and foreign policy related uncertainty begin to clarify.”
Senior bankers and lawyers said that while there are plenty of discussions with clients about transactions, chief executives and boardrooms were cautious about finalising deals.
“The appetite to look at deals is strong but the appetite to execute deals is not the same,” said Piers Prichard Jones, an M&A partner and chair of the law firm Freshfields. “There is a thesis that things could change quite quickly but sitting here now I wouldn’t bet on that.”
Initial public offerings have also failed to rebound as strongly as expected, even if companies such as CoreWeave, StubHub and Klarna are opting to proceed. So far this year IPO proceeds are only about a fifth higher than last year, according to data from the London Stock Exchange Group — well down on 2021 and 2022.
The lacklustre market has led some banks and law firms to adjust their hiring plans.
“Banks still want to hire top talent,” said Will Lahaise co-founder of executive search firm pltfrm. “But as we get to the end of the first quarter, several of our clients indicate that growth in hiring is stabilising rather than continuing the surge that many experienced at the beginning of the year.”
At Goldman Sachs, teams that have fewer live deals may not immediately replace junior bankers who are leaving, according to people familiar with the matter. Goldman declined to comment.
The level of market volatility has made it more difficult for buyers and sellers to agree on prices, although advisers said deals could be revived when more certainty emerged about antitrust policy, for example.
“It just feels like there’s less certainty on valuations than there was previously,” said Stephen Pick, Barclays’ head of M&A for Europe, the Mideast and Africa. “There’s a lot of transactions being sidelined or still on the back burner that can be resuscitated very quickly.”
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