Tariffs and uncertainty will weigh down M&A market this year

At this rate, we’re gonna have to start referring to M&A as “muted and/or absent.”

Four months into 2025, EY released a fresh outlook for how the US M&A market will turn out. And expectations now are, well…they’re not as good as before.

Whereas earlier this year EY predicted an 11% increase in volume for deals over $100 million, the firm now expects “a very slight rise” of 1%. More specifically, EY expects corporate dealmaking will be flat relative to last year, while private equity deal volume should increase 1%.

For context, overall deal volume increased 19% in 2024, with corporate deal volume up 18% and PE deals up 23%.

Near the start of the year, M&A experts told CFO Brew the election of Donald Trump to a second term would bring certainty to the market and consequently buoy dealmaking. In most cases, the opposite has been true. Uncertainty is the buzzword of 2025 so far, with companies not sure how to proceed amid shifting tariff announcements, and consumer sentiment in freefall.

The M&A market did start the year out strong. According to EY, dealmaking increased 9% in Q1. But “persistently elevated policy uncertainty and heightened financial market volatility will challenge dealmaking through the rest of the year.”

“Today, private sector confidence is increasingly fragile in the face of escalating trade tensions, elevated policy uncertainty and heightened financial market volatility,” according to the report. “The combination of these dynamics is weighing on business sentiment and decision-making.”