President Trump’s economic policies, particularly the latest round of reciprocal tariffs, have stirred a perfect storm of speculation in the market. The S&P 500 took a significant hit, and the trade war’s escalation, fueled by China’s retaliatory moves, seemingly caught investors off guard. Even former Trump supporters in the business world are now uneasy, acknowledging the tariffs’ potential to disrupt the economy. Despite its intended purpose of protecting American industries and jobs by reducing the trade deficit and pressuring trading partners to negotiate fairer trade terms, mergers and acquisitions (M&A) have so far slumped to their lowest since the financial crisis of 2008.
This trade move — a response to European and Chinese tariffs — has unsurprisingly sent ripple effects through global M&A, while fears of stagflation and recession loom large. However, M&A activity isn’t cooling — it’s just relocating. With the current climate causing investors to hit the breaks on megadeals, private equity firms and corporate buyers are pivoting to mid-sized acquisitions and cross-border plays. Some firms are hedging with smaller, strategic acquisitions, while others are doubling down on sectors resilient to trade disruptions, such as technology, healthcare, and domestic infrastructure.
With the full effects of the Trump administration’s “Liberation Day” still unfolding — and traditional megamergers facing both regulatory and geopolitical headwinds — deal structures are evolving. Private equity firms are leaning on creative financing, corporate buyers are exploring carve-outs, and sovereign wealth funds are seizing opportunities in less conventional markets. In this new environment, agility and foresight matter more than ever — and those who adapt fastest will define the next wave of M&A.
Shifting Trends in M&A
Megamergers (from $10 billion and above) remain subdued, but mid-sized deals ($1 billion to $10 billion) are thriving, with total deal value in this range up 42% year-over-year. Companies are strategically opting for smaller deals to sidestep regulatory scrutiny. High-profile transactions like Google’s $32B acquisition of Wiz and SoftBank’s $6.5B Ampere deal exemplify this trend.
Antitrust scrutiny has changed the rules of engagement. Rather than pursuing blockbuster mergers that risk prolonged regulatory battles, corporations and private equity firms are assembling strategic portfolios through smaller, high-value acquisitions. These “stealth deals” provide growth opportunities without triggering regulatory alarms, allowing companies to innovate and scale more efficiently.
Rise of Global Dealmaking
While U.S. deal activity has dropped 14%, Europe and Asia-Pacific have surged by 12% and 59%, respectively. Cross-border M&A now accounts for 31% of total deal value, up from 26% last year.
Why the shift? Economic stability, regulatory predictability, and currency advantages make international markets attractive. The U.S. dollar gives American firms more buying power abroad, while European companies, buoyed by a more predictable regulatory environment, are ramping up acquisitions. Meanwhile, Asia-Pacific is seeing a surge in outbound dealmaking as regional powerhouses expand their global footprints.
Sectors such as renewable energy, logistics, and advanced manufacturing are drawing increased interest. European conglomerates, once hesitant due to macroeconomic uncertainties, are now pursuing strategic consolidation plays, while Asian firms are leveraging government incentives to accelerate international growth.
Sleeper Sectors Awakening
Several industries once considered niche are now driving M&A activity:
- Technology: Cybersecurity, AI, and cloud computing continue to attract acquisitions. Google’s Wiz deal underscores the growing demand for cybersecurity solutions. AI-driven platforms are particularly attractive as companies scramble to integrate AI capabilities without developing them in-house.
- Healthcare & Pharma: Large pharmaceutical firms are acquiring biotech startups to expand their drug pipelines. Johnson & Johnson’s $14 billion acquisition of Intra-Cellular Therapies highlights this trend. With regulatory pathways for innovative drugs becoming clearer, M&A has become a preferred method for big pharma to stay ahead in the race for novel treatments.
- Private Equity: Leveraged buyouts are making a comeback, with Sycamore Partners acquiring Walgreens Boots Alliance for $10 billion. Private equity firms are also shifting focus from traditional retail to tech-driven consumer brands, supply chain automation, and subscription-based business models.
- Aerospace & Defense: Increased European military spending is fueling acquisitions in defense contracting, a sector that had previously seen subdued M&A activity. As geopolitical tensions rise, defense firms are ramping up acquisitions to secure key technologies and scale production capabilities.
- Renewable Energy & Infrastructure: With global energy transitions in full swing, investments in wind, solar, and energy storage technologies are accelerating. Private capital is flowing into infrastructure deals that promise long-term, stable returns.
Cross-Border M&A as a Risk Hedge
Geopolitical uncertainty, regulatory shifts, and economic volatility have made risk diversification a top priority for corporations and investors. As a result, companies are looking beyond their home markets, using cross-border M&A to mitigate risks and capitalize on new growth opportunities. By acquiring assets in different jurisdictions, businesses can shield themselves from local economic downturns, regulatory headwinds, or trade disruptions.
For instance, firms wary of escalating tariffs and shifting trade policies are expanding into friendlier regulatory environments and sectors. Recent U.S. tariff hikes on key imports have increased costs for domestic companies, prompting them to seek foreign acquisitions as a hedge against supply chain disruptions and pricing pressures. The European Union, with its stable governance and investor-friendly policies, has become an attractive destination for North American and Asian acquirers. Similarly, U.S. companies are diversifying their footprints to hedge against domestic economic fluctuations.
Navigating cross-border transactions requires deep intelligence, particularly when dealing with language barriers and regional market nuances. AI-powered tools like our platform offers multilingual deal analysis, scans financial reports, regulatory filings, and news sources in over 100 languages. This capability ensures that dealmakers don’t miss crucial signals simply because information is locked in a different language—giving them a competitive edge in identifying and executing strategic acquisitions.
Leveraged Buyouts Making Comeback
With interest rates stabilizing, private equity firms are regaining confidence in leveraged buyouts (LBOs). The Walgreens Boots Alliance sale to Sycamore Partners is a prime example of renewed private equity activity. Additionally, alternative financing structures — such as private credit and seller financing — are enabling firms to close deals despite ongoing economic uncertainty.
The revival of LBOs also signals a shift in how deals are structured. Sponsors are increasingly using earnouts, seller notes, and contingent payments to mitigate risk while maximizing upside potential. Furthermore, private credit funds—once a niche player—have emerged as a dominant force, providing flexible financing solutions that traditional banks have been hesitant to offer.
Predicting the Next Big Deals with AI
Traditional deal scouting is reactive, but technology is making it proactive. AI-powered platforms like Acquirer analyze global financial data to predict M&A activity up to six months in advance. By scanning over 100 languages for early deal signals, our platforms give investors a predictive edge.
AI is revolutionizing deal origination by identifying undervalued targets, tracking sentiment shifts, and even forecasting synergies between potential acquirers and targets. Investment banks and private equity firms are increasingly relying on AI-driven insights to refine their M&A strategies and optimize valuation models.
Even regulatory agencies are leveraging AI to monitor market dynamics, making it imperative for dealmakers to stay ahead of compliance risks. The intersection of AI and M&A is reshaping how firms approach acquisitions—those who embrace data-driven decision-making will have a clear competitive advantage.
Key Trends to Watch
Looking ahead, several key trends are set to define the next wave of M&A:
- The Rise of SPAC 2.0: While the initial SPAC boom fizzled out, a new wave of structured acquisition vehicles is emerging, featuring stronger governance and investor protections.
- Dealmaking in Emerging Markets: Africa and Southeast Asia are becoming attractive for expansion, particularly in fintech, e-commerce, and infrastructure development.
- Regulatory Technology (RegTech) Investments: Companies are acquiring compliance-focused startups to navigate increasingly complex regulatory landscapes.
- The Green Premium: Companies in sustainability-focused sectors will command higher valuations as ESG considerations become central to investment decisions.
M&A is simply adapting to the times. Companies focusing on international markets, mid-sized deals, and sleeper sectors are capitalizing on this shift. With AI-enhanced analytics, predicting the next wave of M&A activity is more precise than ever.
For dealmakers, the key isn’t waiting for traditional mega-deals to return — it’s recognizing where the real action is happening and moving swiftly to seize the opportunity. Whether through strategic bolt-on acquisitions, AI-powered scouting, or creative deal structuring, the next era of M&A belongs to those who adapt to the changing landscape.
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