Mergers and Acquisitions in Trump’s Second Term

The realm of mergers and acquisitions (M&A) is poised for growth in 2025, thanks in part to the new presidential administration and other factors. The recent change in leadership has brought about a sense of stability and predictability that dealmakers have been seeking.

With Donald Trump now in office, many executives are optimistic about the potential deregulation and tax breaks that may accompany his presidency. This sense of certainty is crucial for businesses as they can now make more accurate valuations and projections for the future. According to Mitch Berlin, EY Americas vice chair of strategy and transactions, the settled election allows for better risk assessment, improved modeling, and more precise valuations when entering the market.

The alternative scenario of a Democratic win would have brought about different challenges, including prolonged review processes and increased regulatory scrutiny from agencies like the Department of Justice and the Federal Trade Commission. However, with Republicans in control, the focus shifts to potential impacts of tariffs and trade disputes, adding a new dimension to the risk calculation.

Research conducted by EY suggests that M&A activity is expected to grow by 10% in 2025, with private equity deals projected to increase by 16% and corporate deals by 8%. Previous data from 2024 shows a 13% growth in M&A activity, a 7% increase in deal value, and a 17% rise in deal volume year-over-year. These trends indicate a positive outlook for the dealmaking market in the coming year.

Additional studies support these findings, with the majority of global dealmakers anticipating an increase in M&A and financing activities in 2025. Private equity firms are particularly bullish, with nearly half of respondents expecting to work on deals valued at $10 billion or more. Kevin Desai, a private equity sector expert, notes that historically, there has been a 10% annual increase in M&A activity following a presidential election, highlighting the impact of political changes on dealmaking.

Trump’s cabinet picks, many of whom are considered outsiders, bring a new dynamic to regulatory oversight. Their backgrounds differ from traditional heads, making it challenging to predict how they will govern their departments. However, the general trend towards driving economic growth and reducing regulations is expected to create a more business-friendly environment for dealmaking.

In addition to deregulation, other factors contributing to the strength of M&A activity include a growing GDP, recent interest rate cuts, and a shift in consumer behavior towards services and subscriptions. Companies are adjusting their business models to adapt to these changes, leading to increased deal activity in sectors such as industrial, healthcare, and technology.

Looking ahead, organizations must also consider the impact of international trade policies on M&A. Recent tariff announcements on imports from countries like Canada, Mexico, and China may influence deal negotiations and valuations. Companies acquiring businesses with operations in regions affected by tariffs will need to factor in these additional risks when evaluating deals.

Overall, the M&A landscape in 2025 appears promising, with a combination of political, economic, and consumer trends shaping the future of dealmaking. As businesses navigate these changes, strategic planning and adaptability will be key to success in the evolving market environment.