Global M&A deals put on hold due to tariff uncertainty

The recent imposition of new tariffs by US President Donald Trump has sent shockwaves through the global market, putting a freeze on mergers and acquisitions (M&A) deals. The tariffs, ranging from 10% to 50%, were announced last Wednesday and have fueled concerns about a looming recession and escalating trade tensions. China responded by introducing its own tariffs on US goods and export controls, compounding the economic uncertainty.

The impact of these tariffs has been felt worldwide, with deals being scrapped or delayed across various industries. In Sweden, fintech company Klarna decided to pull its initial public offering (IPO), while San Francisco-based Chime also postponed its IPO. A private equity firm in London backed out of acquiring a European tech company, citing market volatility following the tariff announcement.

The repercussions of the new tariffs have extended to companies like StubHub, which had been preparing for an investor roadshow for its delayed IPO. The mounting uncertainty has prompted them to push back their plans in light of the prevailing market conditions. Similarly, Israeli-based eToro postponed investor presentations for its IPO on Wall Street until after April 20 due to increased market volatility.

The heightened uncertainty surrounding the tariffs and their potential impact on the cost of debt and valuations has made it challenging to finalize deals. A senior banker noted that securing deals and determining company valuations would become increasingly difficult as a result of the tariffs. If this trend continues, companies may face challenges in raising funds and making long-term investments, ultimately impeding economic growth.

Even prior to the recent tariff announcements, concerns about trade tensions had already contributed to a 13% decline in US M&A activities in the first quarter of the year. The uncertainty stemming from the tariffs has created a sense of unease among corporate leaders, affecting their confidence in pursuing deals. According to Antony Walsh, a corporate M&A partner at Eversheds Sutherland, it is this uncertainty that has had the most significant impact on executive decision-making.

The relentless trade war has sent shockwaves through global markets, leading to significant losses on major indices like the S&P 500. Investment bank JP Morgan has raised the likelihood of a recession by the end of the year to 60%, attributing it to the escalating trade tensions. The market turmoil and mixed messages from the Trump administration have left investors and companies grappling with uncertainty, making it challenging to navigate the current economic landscape.

In conclusion, the imposition of new tariffs and escalating trade tensions have cast a shadow of uncertainty over the global M&A landscape. The resulting market volatility has forced companies to reconsider their deal-making strategies and put potential IPOs on hold due to the prevailing economic uncertainty. As trade tensions persist, the long-term impact on global markets and economic growth remains uncertain, leaving companies and investors bracing for an uncertain future.