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Donald Trump’s “liberation day” tariffs fell to the lowest level in a decade in the second quarter, except for the early months of the pandemic, as dealmakers extended the uncertainty they were forced to pull back from everything but their biggest acquisitions.
According to data from the London Stock Exchange Group, the total number of transactions announced over the three months announced by June 30 has fallen to around 10,900. Excluding the second quarter of 2022, that figure was the lowest since its inception in 2015, as the Covid-19 lockdown overcame the global market and only 10,600 transactions were announced.
Dealmakers initially expected the more conservative White House to pull back regulations and unleash the wave of acquisitions.
Instead, businesses and investors had to navigate a more dangerous geopolitical background than expected with the announcement of broad tariffs by the US on April 2nd and the announcement of a conflict in the Middle East that promotes volatility in the market.
“After the initial liveliness of the first month or two, the attitude in the boardroom was cautious,” said Lorenzo Corte, global trading director at the law firm Skadden.
Despite escalating trade tensions since the start of the April quarter, LSEG data shows that the value of a stable transaction at $969 million from the first quarter of the year was supported by a handful of strategic megadales.
More than $10 billion in transactions have risen by three-quarters this year, with the top transactions in the second quarter included a $35 billion take private acquisition of Cox’s Charter Communications, a $33 billion take private acquisition of Toyota Motor’s largest subsidiary, and a $2.4 billion take private acquisition of Abu Davi National Petroleum Company’s Australian Santos.
“There’s a demand for large-scale strategic transactions,” said Jim Langston, partner at law firm Paul Weiss. “If a company is trying to bet on M&A, they want it to be something that moves the needle and the reward is worth the risk.”
Economic growth, inflation and the uncertain outlook for dollars also serve as specific drugs in the private equity industry, making it more difficult to value assets.
Global private equity back ahuel has been slowed sharply between the first and second quarters, close to about 2,500 to the second 1,850 in the first three months. Compared to the same period in 2024, 1,250 private equity transactions occurred in the first half of this year.
Deal makers focus on public companies acquisitions and the sale or calculation of assets that are deemed to be no longer core, according to Jens Welter, Citi’s North American Investment Bank’s director of compensation.
Such transactions include the acquisition of KKR’s £4.7bn London-listed Industrial Group Spectry, as well as a survey of BP in the sale of lubricant arm castrol. Welter said he is helping dill makers add contracts to their contracts to agree to a more Choppier market deal.
“We expect take private and corporate carve-out volumes to remain at record levels, but transactions are highly structured, including rollover and deferral mechanisms,” Welter said.
Some advisers remained optimistic that stabilizing the geopolitical outlook would lead to picking up activities later in the year.
Oliver Smith, co-head of Davis Polk’s M&A practice, said the build-up of demand felt like the early days of the Covid-19 pandemic.
“That’s when people realized that the sky hadn’t fallen, and things were picked up for a while,” Smith said. “It feels like the moment comes when businesses get used to uncertainty.”
