Following last year’s US presidential election, there was broad expectation that the current administration would be business-friendly, with a more accommodating regulatory environment.
Yet, the recent whipsawing on tariffs and other policy issues has cooled enthusiasm in certain sectors and may significantly reshape mergers and acquisitions (M&A) this year, creating both challenges and opportunities across sectors.
On one hand, the risks to US equities have begun to prompt a reappraisal of diversification, triggering a switch from the US to European and UK equities, which could mean greater investment in UK companies and even a boost in IPO activity.
Additionally, first quarter deals on Datasite, which facilitates about 19,000 new deals annually, are up 12% globally year-over-year (YoY) creating,a strong momentum for 2025 . Tariffs are accelerating the reshoring trend that began during the pandemic. Some foreign manufacturing companies are already pursuing this approach.
The technology, media and telecommunications sectors (TMT) also shows promise, with increased M&A activity expected in AI, semiconductors and advanced technology companies as investors seek to consolidate domestic capabilities and reduce international supply chain vulnerabilities.
On the other hand, some of the apprehension was predicted. Last year, 80% of global dealmakers surveyed by Datasite said they were concerned about the impact of elections on trade and supply chains, while 35% identified increased trade tensions as a key risk to M&A.
This hesitation is becoming evident on Datasite, where hold rates on deals have advanced three percentage points YoY, year-to-date. Successful buyers are also taking more time with diligence instead of rushing through, particularly in the healthcare and energy industries.
A major concern is that it could be challenging to get deals completed with the cost of debt expected to increase. Additionally, if the US dollar is weakened, and valuations may become harder to ascertain.
Amidst the geopolitical instability triggered by the tariffs, they could also open new opportunities for individual countries like the UK. Though the levies have been paused for 90 days, the 10% duty placed by the US on imported UK goods, is considerably less than many other countries, including some EU countries at 20% .
This lower tariff, which may change , could give UK manufacturers a competitive advantage on a global scale. Additionally, while London ’s status as a globally competitive stock exchange took a hit last year, risks to US equities could spark a pivot from the US to European and UK markets.
Already, the uncertainty and market instability caused by US tariffs has led several major companies to pause their IPO plans.
This hesitation is becoming evident on Datasite, where hold rates on deals have advanced three percentage points year-over-year, year-to-date. Successful buyers are also taking more time with diligence instead of rushing through, particularly in the healthcare and energy industries.
A major concern is that it could be challenging to get deals completed with the cost of debt expected to increase. Additionally, if the US dollar is weakened, valuations may become harder to ascertain.
Yet, while some of the market uncertainty will undoubtedly spur more of a ‘wait and see’ approach to dealmaking, due diligence will become even more critical, requiring deeper geopolitical risk assessments. And while this could create a drag, pent-up demand and opportunities will drive dealmakers to accelerate transactions.
Private equity (PE) can’t afford to stop dealmaking and is self-fuelling in many respects. Additionally, the private markets have more options when it comes to creative deal structuring.
Mark Williams is global chief revenue officer at Datasite