Global mergers and acquisitions revenue falls as Trump pursues tariffs

The opening salvo of a global trade war initiated by US President Donald Trump and the resultant market turbulence have cast a shadow over bankers’ optimistic outlook for a strong start to the year for deals on Wall Street. According to Dealogic data compiled for Reuters, first-quarter mergers and acquisitions volume increased by 12.6 percent to $984.38 billion compared to the same period last year. The surge was primarily driven by the Asia Pacific region, where China’s announcement of three major state-run deals and a ports deal almost doubled M&A volume from the previous year.

However, the overall sentiment among bankers globally has shifted as they scale back deals and see a decline in revenue generation. In the US, the epicenter of global M&A transactions, first-quarter volume slipped by 13 percent to $436.56 billion, despite a slight increase in IPO activity. The uncertainty surrounding the prolonged trade war has made future deals less appealing, as highlighted by Matt Witheiler of Wellington Private Investments cautioning against the challenges and potential pitfalls of going public.

The ebullient atmosphere that prevailed last year, fueled by expectations of favorable tax cuts and deregulation under a new administration in the US, has dissipated, leaving behind a market fraught with uncertainty. As Cassander Verwey, JPMorgan’s co-head of M&A in Europe, the Middle East, and Africa, noted, deals announced during the exuberant phase have either been abandoned or put on hold due to the prevailing uncertainties.

The dwindling confidence in the M&A market is evident not only in the US but globally, with investment banking fees dropping by 4.9 percent to $21.47 billion from the previous year. The total number of deals in 2025 has plummeted to a 20-year low, marking a 25 percent decline to 7,629 transactions. Analysts are already revising down first-quarter earnings estimates for major banks involved in M&A deals. Jens Welter, head of North American investment banking coverage at Citi, highlighted the cautious approach necessitated by significant tariff exposure, impacting deal launches and executions.

Despite the prevailing challenges, there remains a glimmer of hope in the midst of the turbulence. Google’s $32 billion acquisition of cloud security company Wiz, the largest deal of the quarter, gained traction due to expectations of a more favorable regulatory environment under the Trump administration. Ivan Farman, co-head of global M&A at Bank of America, expressed optimism regarding the market’s resilience, fueled by ample liquidity and a pent-up demand for M&A activity following subdued years.

The European market saw a 7 percent increase in activity from the previous year, buoyed by significant deals like Mediobanca’s bid for Banca Monte dei Paschi di Siena. However, the overall deal total for Europe dropped by 32 percent, indicating the pervasive impact of stalled deals on the market. The threat of job cuts looms over Wall Street banks if M&A activity fails to rebound in the coming months, hinting at potential restructuring measures to mitigate the downturn.

The uncertainty in the market has also rippled through IPOs, with the S&P 500 and Nasdaq 100 registering steep declines since Trump’s inauguration. The dampened optimism for 2025 IPOs underscores the need for certainty among issuers and investors, with concerns about pricing equity appropriately in the current climate of economic and geopolitical unpredictability. Liquefied natural gas exporter Venture Global and artificial intelligence startup CoreWeave’s lackluster performance post-IPO has cast a shadow over the IPO pipeline, raising apprehensions about weakening sentiment toward AI infrastructure.

As market volatility persists, some European companies have postponed IPO plans in favor of alternative strategies, such as the sale of OLB to Credit Mutuel Alliance Federale, underscoring the challenging environment facing IPO candidates. While the road ahead may be fraught with uncertainties and challenges, the resilience of the market and the underlying liquidity offer a glimmer of hope for a potential turnaround in M&A activity, heralding a cautiously optimistic outlook amid turbulent times.