M&A Outlook and Trends

Market Activity & Sector Trends

U.S. M&A volumes have surged +23% through the end of August, driven by a record wave of mega-deals (>$10B) as CEOs gain confidence in strategic acquisitions. The tech, consumer, and media & telecom sectors led the charge, fueled by AI innovation, resilient consumer spending, and digital transformation momentum.

Macroeconomic Mixed Signals

Inflation remains above the Fed’s 2% target at 2.9%, but the September rate cut, along with expectations for two more this year, signals a supportive policy shift aimed at sustaining growth. While the Fed continues to take a measured approach, recent communications suggest a growing readiness to act as economic conditions evolve, balancing inflation concerns with emerging signs of softening momentum.

Labor market conditions are stable but tightening, with declining consumer sentiment. Among corporates, CEO confidence has rebounded from a three-year low, supported by easing tariff concerns and solid inflation data, contributing to a strong post-April rally in U.S. equities. IPO activity remains subdued, still below pre-COVID levels following the 2021 IPO / SPAC surge.

Sponsor Dynamics

Private equity sponsors are approaching a tipping point. Pressure to exit and return capital to LPs is intensifying, with elevated dry powder offering opportunities to capitalize on market dislocations.

While large-cap PE continues to dominate, middle-market sponsors are gaining ground, increasingly contributing to overall deal volume through upmarket moves.

Strategic Buyer Momentum

Strategic M&A remains steady, supported by elevated cash reserves and tariff-driven cost pressures that encourage consolidation. With fewer constraints from boards and regulators, strategic deal volume was up +18% in 1H’25 versus 2024. Meanwhile, corporate divestitures increased +46% year-over-year, as tight interest rates led companies to reassess underperforming assets.

Regulatory & Political Landscape

Tariff negotiations and reciprocal rulings remain in flux, with key court decisions expected later this year. Despite this uncertainty, several factors could boost M&A activity:

• A weakening U.S. dollar may attract foreign acquirors seeking U.S. assets.
• Regulatory review times and deal abandonment rates have increased.
• The new administration has reinstated early termination notices and is actively approving mergers, showing greater openness to private equity buyers.