The global trade war sparked by US President Donald Trump and the market turmoil that followed his announcements of new import tariffs have worsened bankers' predictions of a solid start to what is expected to be a successful year for Wall Street transactions, according to a Reuters analysis.
Global mergers and acquisitions volume in the first quarter of 2025 rose 12.6% year-on-year to $984.38 billion, according to Dealogic figures, a dynamic driven almost entirely by the Asia-Pacific region, where three large state-owned deals were announced in China on Sunday.
Bankers around the world are now cutting back on their deals and, as a result, earning less income, the source cited notes. In the United States, where nearly half of global M&A deals are made, first-quarter volume fell 13 percent to $436.56 billion. And "while IPO activity has picked up, a prolonged trade war will make it less attractive going forward," said Matt Witheiler, an asset manager at Wellington Private Investments, quoted by Reuters. He added: "Could companies list now? Sure, anyone can list at any time if the fundamentals are good. But is it worth listing in this environment? Probably not."
New equity offerings rose about 4.1 percent in the first quarter to $160.22 billion, but some recent IPOs failed to impress, and the number of offerings fell 17.7 percent to 1,065, according to Dealogic data.
"Many of the deals announced in the first quarter were set last year, at a time when there was growing exuberance around the new US administration, expectations of tax cuts and deregulation," said Cassander Verwey, co-head of M&A for Europe, the Middle East and Africa at JPMorgan. "The reality is that the exuberance has left the market and more uncertainty has crept in," says Verwey.
Wall Street executives and analysts had expected Trump to cut regulations, lower taxes and enact more pro-business policies. But since taking office, US stocks have fallen sharply, and the pro-business scenario looks less likely by the day.
Verwey said the M&A markets need confidence, and some potential deals have been shelved due to uncertainty. Bankers fear the deal slowdown will last. Globally, investment banking fees fell 4.9% year-to-date to March 28 from a year earlier to $21.47 billion, according to Dealogic. Total deals in 2025 fell 25% to 7,629, a 20-year low. Analysts have already started cutting first-quarter earnings forecasts for some of the largest banks that advise on M&A deals. "There's probably a little bit more caution if a company has significant exposure to tariffs, either in terms of launching an IPO or a transaction," said Jens Welter, who heads Citi's North America investment banking division.
Some Wall Street banks are preparing for job cuts if M&A activity doesn't pick up or improve, at least in the coming months, analysts quoted by Reuters said.
Ivan Farman, co-head of global M&A at Bank of America, is more optimistic, saying: "There's still a lot of liquidity in the market and a willingness to put cash to work. There's also demand after a couple of slower years of M&A. We were a little bit more cautious before March, but after the activity we've seen in the last few weeks, we're more optimistic."
• Asia deals up 92%
Deal volume in Asia rose 92% year-on-year in the first quarter of 2025 to $264.46 billion, driven largely by deals in China and the $19.2 billion sale of ports by Hong Kong-based CK Hutchison. Ports near the Panama Canal were also sold to a group led by BlackRock.
The three acquisitions announced by China's Ministry of Finance on Sunday total more than $55 billion.
Large European deals helped boost activity by 7% year-on-year to $190.18 billion. They included Banca Monte dei Paschi di Siena's $13.8 billion bid for Mediobanca. However, the number of deals in Europe fell 32% to 2,647, the source said.
• Volatility Threatens IPOs
From Donald Trump's inauguration on Jan. 20 through the end of March, the S&P 500 index fell more than 6% and the Nasdaq 100 index fell more than 10%, according to LSEG data. That has dampened optimism for IPOs in 2025, after many companies waited years to list.
"Issuers and investors want certainty," says Keith Canton, head of U.S. capital markets at JPMorgan. "They want to understand how business models will be affected so they can price an offering appropriately."
And Robert Stowe, head of U.S. capital markets at Barclays, says: "When you put the combination of tariffs and general economic uncertainty together, it makes it harder for a management team to have real comfort in the trajectory of their business and the ability to perform in those critical first quarters post-IPO."
Some European companies have postponed their listing plans. For example, German pharmaceutical company Stada postponed its planned Frankfurt IPO due to market volatility. German bank OLB, another IPO candidate, opted to be taken over by French banking group Credit Mutuel Alliance Federale.
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