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Dealmaking slumped in the second quarter to the lowest level in a decade, excluding the early months of the pandemic, as Donald Trump’s “liberation day” tariffs extended a run of uncertainty that has forced dealmakers to pull back from all but the largest takeovers. The total number of deals announced in the three months to June 30 fell to about 10,900, according to data from the London Stock Exchange Group. Excluding the second quarter of 2022, when Covid-19 lockdowns upended global markets and just 10,600 deals were unveiled, the figure was the lowest since the start of 2015.
Dealmakers had initially expected that a more conservative White House would pull back on regulation and unleash a wave of takeovers. Instead, companies and investors have had to navigate a more perilous geopolitical backdrop than anticipated, with the announcement of wide-ranging tariffs by the US on April 2 and conflicts in the Middle East driving volatility in markets. “Following the initial exuberance of the first month or two, the attitude in the boardroom has been cautious,” said Lorenzo Corte, global head of transactions at the law firm Skadden.
Despite the escalation of trade tensions since the start of the quarter in April, the LSEG data show that the value of transactions held steady from the first quarter of the year at $969bn, propped up by a handful of strategic megadeals.
Deals worth more than $10bn have risen by three-quarters this year, with top transactions in the second quarter including Cox’s $35bn takeover of Charter Communications, a $33bn take-private of Toyota Motor’s biggest subsidiary, and a consortium led by Abu Dhabi National Oil Company’s $24bn acquisition of Australia’s Santos. “There’s pent up demand to do large strategic transactions,” said Jim Langston, partner at law firm Paul Weiss. “If companies are going to make a bet on M&A, they want it to be something that moves the needle, that the reward is worth the risk.”
The uncertain outlook for economic growth, inflation, and the dollar have also acted as a particular drag on the private equity industry, making it more difficult to value assets. Global private-equity backed acquisitions slowed sharply between the first and second quarters of the year, from about 2,500 in the first three months to closer to 1,850 in the second. There were 1,250 fewer private equity deals struck in the first half of this year compared with the same period in 2024.
Dealmakers have focused on public company takeovers and the sale or carve-out of assets regarded as no longer core, according to Jens Welter, Citi’s head of North America investment banking coverage. Such transactions include KKR’s £4.7bn acquisition of London-listed industrial group Spectris, and BP’s exploration of a sale for its lubricants arm Castrol. Welter said that dealmakers were adding in terms to contracts to help agree transactions in choppier markets.
“While we expect the take-private and corporate carve-out volumes to remain at record levels, transactions are highly structured involving rollovers and deferred mechanisms,” Welter said. Some advisers remained optimistic that a stabilizing geopolitical outlook would lead to a pick-up in activity in the second half of the year. Oliver Smith, co-head of Davis Polk’s M&A practice, said the build-up in demand felt like the early days of the Covid-19 pandemic.
“People realized then that the sky wasn’t falling in and things picked up for a while,” said Smith. “It feels like that moment in time is coming once companies get used to the uncertainty.”
