The five forces driving M&A dealmaking in 2025

By David Strempel, Vice Chairperson, Translink Corporate Finance International and Partner at Translink Corporate Finance Italy

Contributors: Vittoria Dalla Rosa, Associate and Matteo Buttinelli, Associate, Translink Corporate Finance Italy

The first half of 2025 has presented a paradox for global M&A dealmaking. While the year began with encouraging signs of renewed momentum, the second quarter introduced escalating trade tensions and profound policy uncertainty.

The headline numbers suggest a market finding its footing. From January through June, global M&A deal volume reached $2.14 trillion, a significant 26% year-on-year increase, according to data from The Economic Times. However, this figure masks a more complex reality. As a recent Financial Times analysis highlights, “investment and dealmaking have already slowed” significantly following new tariff announcements in April, creating a climate of deep unease across global boardrooms.

Here, Translink Corporate Finance analyses the five key themes that defined this divided market in H1 2025 and offers insights into what businesses must consider when navigating this landscape.

1. Deal confidence is tested by pervasive uncertainty

After two years of caution, market sentiment was improving at the start of 2025. Stabilising inflation, easing market volatility, and record highs for the S&P 500 and Nasdaq encouraged dealmakers to pursue ambitious targets. An ACG community survey reflected this early optimism, with 77% of respondents expecting deal volume to increase in 2025.

However, this confidence was tested in the second quarter. The Financial Times reports that the fallout from President Trump’s tariff announcements has had a “freezing effect on deal activity”. This is not just sentiment; it is reflected in the data. The number of private equity buyout deals and exits slowed sharply in Q2 2025. Additionally, 30% of dealmakers were either pausing or revising deals specifically because of the uncertainty caused by tariffs.

2. Sector-specific trends drive strategic activity

While macroeconomic uncertainty has caused a pause, long-term strategic imperatives continue to drive activity in specific sectors.

• Technology, Media, and Telecoms (TMT): This sector continues to lead, with a focus on acquiring capabilities in artificial intelligence. According to a Q1 2025 market review by Intellizence, TMT remains the dominant force. Transactions like Google’s $32 billion acquisition of cybersecurity firm Wiz and xAI’s $33 billion acquisition of the social media platform X aim to consolidate data and talent for AI development.
• Healthcare: Large pharmaceutical players are using M&A to replenish pipelines. The $14.6 billion acquisition of Intra-Cellular Therapies by Johnson & Johnson, as well as Merck’s $10 billion investment in Verona Pharma, highlight this trend. However, this sector is also directly in the crosshairs of trade disputes, with the Financial Times noting the Trump administration is considering sectoral tariffs on pharmaceutical imports, specifically targeting manufacturing hubs like Ireland.
• Energy and Environment: Consolidation and strategic realignment continue to reshape the energy landscape. Deals like Constellation Energy’s $16.4 billion acquisition of Calpine signal a move toward creating large-scale clean energy platforms. In Italy, market-leading players like Saipem have joined forces with Norwegian Subsea7, making a player with more than $20 billion in consolidated revenues and one of the largest companies in energy services with a strong presence in subsea and offshore engineering and construction.
• Defence: The surge in spending across NATO countries and other regional powerhouses is boosting M&A deals in the space, not only in hardware. Cybersecurity, for example, is considered a “critical infrastructure” with PEs strongly investing in the space due to short exit cycles and recurring revenue models, which Translink observed while interacting with several PE-backed companies in the industry.

3. Private equity is cautiously re-engaging, but exits have stalled

Private equity firms are re-engaging, but their caution is well-founded. While the year began with a focus on deploying capital, the primary challenge has shifted to the inability to exit investments. The “sell-side” backlog that has persisted is now exacerbated by market uncertainty.

In this regard, as observed by our colleagues in the United States, H1 2025 has presented several challenges linked to the abrupt change in the U.S. trading policy in Q2 2025, which resulted in a decline in the total number of deals.

According to the Financial Times article, the “most tangible consequence of the Trump tariffs so far is not supply chain reordering, but the sudden dearth of dealmaking”. This has a direct impact on private equity. While deals like Sycamore Partners’ $10 billion acquisition of Walgreens Boots Alliance show capital is available for the right asset, the broader environment for exits remains frozen.

Translink CF’s Private Equity’s strategic role in M&A article unpacks how this is forcing a shift in PE operations, with firms acting as long-term partners in business transformation rather than relying on quick flips.

4. Cross-border dealmaking is resilient but increasingly complex

Despite geopolitical headwinds, the search for strategic assets and market access continues to drive international capital flows. Asia saw deal value surge to $583.9 billion in H1, driven by landmark deals like Toyota’s $33 billion move to take a supplier private and ADNOC’s $18.7 billion acquisition of Santos in Australia.

However, the landscape for cross-border deals has become a minefield. The Financial Times reports that U.S. imports from China fell 43% in May from the previous year, a direct consequence of tariffs. This is not just a U.S.-China issue. Britain is fighting to secure a carve-out from 50% steel tariffs, and other key trading partners face similar threats. This dynamic introduces extreme complexity, where the value of a target can be altered overnight by a policy decision.

This reinforces the need for expert guidance in navigating complex multijurisdictional approvals and volatile macroeconomic assumptions that differ wildly from one country to the next. Regulatory tensions can also be seen as an opportunity to drive cross-border M&A activity as companies seek to strengthen their global positions quickly by acquiring assets in stable regions and to ease their adaptation to new regulatory frameworks.

5. The human and political factor when navigating a complex landscape

The current environment proves that M&A success hinges on navigating non-financial risks. The Financial Times underscores that this crisis is different from the pandemic or the 2008 financial crisis because “it all comes down to the whims of Donald Trump”. This personalises political risk in an unprecedented way.

This dynamic goes beyond standard regulatory reviews. The proposed U.S. Steel/Nippon deal showed how labour and political sentiment can become central to a deal’s fate. In this environment, government oversight tools like the Committee on Foreign Investment in the United States (CFIUS) are wielded with an expanding definition of national security.

Success now demands more than technical diligence; it requires a nuanced understanding of the political elements that can make or break a transaction. In this context, future volatility in input prices, often driven by geopolitical developments, has become a decisive factor in both valuations and structuring. Trade restrictions, national security reviews and political optics now weigh as heavily as EBITDA trading multiples in deal valuations.

With over five decades of M&A dealmaking experience and a global footprint, Translink Corporate Finance is well-positioned to guide clients through these immense complexities. With almost a third of total deals involving counterparts from different countries, Translink can ensure clients’ strategic ambitions are safeguarded and that they get the deal done, even in the most uncertain of times.

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