What’s Behind the Sluggish Start for M&A in 2025?

Wall Street was hoping for fireworks, but instead, it got fizzlers. After Donald Trump returned to the White House, dealmakers anticipated a flood of mergers and acquisitions (M&A). Deregulation talk, tax cut teasers, and a presumed friendlier stance on big business had investment bankers dusting off their pitch books. But so far in 2025? Not exactly the blockbuster sequel they had in mind.

So What’s the Hold-Up, Anyway?

Turns out, uncertainty is still the ultimate party pooper in the M&A world. As of early March, global M&A transactions are down 17% compared to the same time last year, just $470 billion in deals have been announced so far, according to Bloomberg. For context, this isn’t just a bad quarter; in the last 20 years, no year has bounced back from such a sluggish Q1 to beat the prior year’s total.

Why the slump? Let’s break it down:

Tariff turmoil: From lumber to semiconductors to auto parts, Trump’s whirlwind of proposed and enacted tariffs has everyone on edge. Even Johnson Controls’ CFO quipped that having a crystal ball to predict tariff changes would be a big help.

• High interest rates: The Fed hasn’t cut rates as quickly as markets hoped, which means the cost of borrowing is still elevated. What looks good at 3% doesn’t exactly dazzle at 10%.
• Price tag paranoia: Valuations remain steep, sellers want 2021 prices, and buyers are thinking 2023. The result? A good old-fashioned standoff.
• Regulatory whiplash: Despite expectations of looser antitrust enforcement, Trump’s administration has retained many of the Biden-era merger review policies. Surprise!

So yeah, dealmaking enthusiasm exists. But execution? Not quite there yet.

The Private Equity Players Are Stirring

Private equity firms, you know, the big spenders behind many mega-deals, are in a weird spot. After a few “constipated” years (yes, that’s the word one advisor used), PEs are itching to play again. Many are sitting on “dry powder” (unused cash), but uncertainty around rates and geopolitics has left them clutching their checkbooks.

Still, some activity is bubbling up. Financial sponsor-backed M&A reached $295 billion so far in 2025, up from $160 billion a year earlier. That’s a solid sign of life. But let’s not throw confetti just yet, a lot of those are portfolio exits meant to return capital to investors, not bold new plays.

Media Sector Hits the Brakes

If you thought tech and media were gonna party like it’s 1999, think again. M&A in the technology, media, and telecom (TMT) space fell 40% year-over-year, dropping from $114 billion in early 2024 to just $68.3 billion this year. The number of deals has also shrunk by over 100.

Source: yahoo!finance 

Trump’s “America First” policies may be aimed at boosting domestic control, but his lawsuits (like the one against Paramount over a “60 Minutes” segment) and regulatory jabs (like probing Comcast’s DEI practices) have companies too spooked to sign on the dotted line. Even the much-hyped Paramount–Skydance merger has hit turbulence.

Source: yahoo!finance

As one exec quipped at the Sun Valley media mogul retreat: “We just need an opportunity for deregulation, so companies can consolidate and do what we need to, to be even better.” Translation: we’re stuck in neutral.

Just Fewer and Quirkier

Some big fish have still made waves. Google’s parent Alphabet dropped $32 billion on cybersecurity firm Wiz, and BlackRock led a $23 billion acquisition of ports near the Panama Canal. But these are outliers — not trends. There’s also a bit of “wait-and-see” paralysis in the boardrooms. Many companies are still talking deals behind closed doors. They just don’t want to pull the trigger until tariffs, Fed policy, and regulatory signals become clearer. Or, as one M&A lawyer put it: “The appetite to look at deals is strong. The appetite to execute deals? Not so much.”

The Bottom Line

For now, dealmakers are stuck in limbo, unsure whether 2025 will end in a champagne pop or just another shrug. There are trillions in capital sitting idle, and if interest rates drop or some regulatory clarity emerges, that ice dam could break quickly. But until the tweets slow down, and tariffs stabilize, many CEOs are playing it safe. Or in the words of one savvy CFO, “We're in wait-and-see mode. These are big operations, they can't just pivot on a dime.” So, don’t count out a turnaround. Just don’t bet the farm on it either. Want more scoop on keeping your books bulletproof? Subscribe to our newsletter or follow us for the latest trends.