Mergers and acquisitions during the first half of this year were not what investment bankers had hoped for, but a burst of big deals in Asia and renewed optimism in U.S. markets could be paving the way for megadeals.
Market uncertainties stemming from U.S. President Donald Trump's trade war, high interest rates and broader geopolitical tensions hampered — but did not completely derail — what bankers expected to be a blockbuster year for global M&A, dealmakers say.
Trump's tariff policies, kicked off by his self-styled "Liberation Day" on April 2, cast a chill over the markets and pushed several deals and initial public offerings into subsequent quarters.
"The expectation was we would see a lot of deal activity in the first half of 2025, and the reality is we didn't see it," said Tommy Rueger, global co-head of equity capital markets at UBS, which Dealogic ranked No. 9 in equity capital markets revenue, according to preliminary data from January 1 through June 27.
Interviews with more than a dozen top bankers signal growing confidence that the worst of the market turbulence is over. Fresh record closing highs for the S&P 500 and Nasdaq indexes have helped renew optimism that M&A in the second half of the year will be even stronger, dealmakers say.
"There were a lot of deals that were put on hold that will come back," said Ivan Farman, co-head of global M&A at Bank of America, which was ranked No. 3 in overall investment banking revenue and No. 5 for M&A in Dealogic's year-to-date rankings. "I'm optimistic about the second half."
There is reason for optimism, dealmakers say, with the recovery in the markets and Trump's easier antitrust policies paving the way for bigger deals. "The probability of very large transactions, perhaps $50 billion-plus, has increased versus a year ago," said John Collins, global co-head of Mergers & Acquisitions at Morgan Stanley, which was ranked No. 4 in overall fee revenue among investment banks and No. 3 for M&A deals.
Some $2.14 trillion in deals were signed from January 1 through June 27, up 26% from the same period last year. Part of that increase, however, came from Asia, where activity more than doubled to $583.9 billion.
Deal activity in North America rose to $1.04 trillion from January 1 through June 27, up 17% from the first half last year, according to preliminary data from Dealogic.
Market volatility, as measured by the VIX index (.VIX), has dropped to levels that indicate investors feel safer to invest today.
"It's been clear that momentum continues to build, paving the way for larger transactions. People are feeling more positive than they were a month ago and starting to implement their decisions," said Philip Ross, vice chairman of Jefferies bank.
As the markets calm down, institutional investors are starting to jump back in to equities and more companies are moving forward with IPO plans that had been postponed earlier this quarter. “The combination of all of those together has created, over the last three to four weeks, an incredibly strong new issue backdrop and we’ve seen a significant uptick in activity," Rueger said.
Saadi Soudavar, head of equity capital markets for Europe, Middle East and Africa at Deutsche Bank, added: "Equity markets have shown a remarkable ability to shrug off a lot of the tariff and geopolitical related volatility."
MORALE BOOSTERS
A few big deals helped boost market morale at the height of tariff turmoil, including Global Payments' $24.25 billion acquisition of a card processing and account services firm in April.
Charter Communications (CHTR.O)in May agreed to buy privately held rival Cox Communications for $21.9 billion. And U.S.-based equipment manufacturer Chart Industries GTLS.N and Flowserve Corp (FLS.N) agreed to merge, valuing the combined company at about $19 billion.
There were 17,528 deals signed during the first half of this year, compared with 20,583 deals in the same period last year, according to Dealogic. But this year's deals were bigger in size, pushing the total value of deals higher. There was a 62% increase in the number of $10 billion-plus deals versus the same period last year, the data shows.
Dealmaking in Asia was a bright spot. Overall M&A activity rose to $583.9 billion in the first six months, up from $269.9 billion a year ago.
Led by Japan and China, the region accounted for 27.3% of the global M&A activity, gaining more than 11 percentage points from the same period last year.
Some of the region's biggest deals were kept within the Asia-Pacific region. Toyota Motor (7203.T) announced plans on June 3 to take one of its suppliers private for $33 billion. On June 16, a consortium led by Abu Dhabi's National Oil Company (ADNOC) launched an $18.7 billion all-cash takeover of Australia's second-largest oil producer Santos (STO.AX).
Asia also helped drive global equity issuance higher despite the market volatility, with overall volume rising nearly 8% to $350 billion from the same period last year.
"You will see more Asia-to-Asia activity," said Raghav Maliah, global vice chairman of investment banking at Goldman Sachs, which was ranked No. 2 in overall investment banking fees and No. 1 in M&A revenue. "Japan has been a big driver in all the deal volumes (in Asia) and we do believe that trend will continue."
