Facing unexpected market volatility and geopolitical uncertainties, normally optimistic dealmakers are sounding a more cautious note for the coming weeks and months but are confident the pace of mergers and acquisitions will pick up later this year.
"Our clients are waiting and seeing to see how things work out," said Paul Weiss partner Scott Barshay, one of Wall Street's most prominent dealmakers.
"We are busy ... It's hard to see the year ending on a slow note," he said, adding that large deal announcements should start popping up within the next few months.
Top M&A lawyers, bankers, proxy advisors and proxy solicitors as well as public relations executives gathered on Thursday and Friday in New Orleans for the 37th annual Tulane Corporate Law Institute conference to discuss trends in the industry and highlight upcoming concerns.
More than 1,000 people flew to the Crescent City from Amsterdam, Mumbai, New York, San Francisco, Toronto, Chicago, Washington D.C. and Wilmington, Delaware to hear about trends, new regulations and the mood some 60 days into the new Trump administration.
Attendees described a current chill on dealmaking, attributing it to a lack of predictability coming from Washington.
M&A activity in the U.S. during the first two months of this year was the slowest in more than two decades, with only 1,172 deals worth $226.8 billion through Friday, according to data compiled by Dealogic. That was down by about a third from the same time last year by both volume and size and the slowest open by volume since 2003.
Jennifer Muller, managing director and co-head of investment bank Houlihan Lokey’s board advisory and opinions practice, said that a few months ago, consensus estimates pegged M&A deal volume in 2025 at $3.5 trillion versus $3 trillion last year.
"Given the rocky start, that may be harder to achieve. And in this case, when I say may, I actually mean will," Muller said during a panel.
Potential sellers have become increasingly nervous, especially as the VIX CBOE Volatility Index (.VIX), known as Wall Street's fear gauge, reached 24.41 on Thursday, which is considered elevated.
Muller still sees deal opportunities in certain sectors like technology, energy and financials.
Other speakers at the conference said the current situation, where the main U.S. S&P stock index (.SPX) drifted into negative territory for the year, feels more like a pause versus a severe drop off in activity.
Lawyers said they remained busy in laying the groundwork for mergers and said companies were still interested in hiving off units that no longer fit and that there was plenty of money available to finance dealmaking.
Private equity firms and demands from activist investors are expected to provide a good dose of fuel for dealmaking at a time more corporations are bracing for costly and noisy fights with shareholders who are pushing for changes.
Private equity funds, which currently own around 12,000 companies, are facing mounting pressure to exit their portfolio companies and return capital to investors.
However, progress is continually interrupted by a deluge of news. On Tuesday, President Donald Trump's 25% tariffs on goods from Canada and Mexico went into effect.
"You don't know where the curve ball is coming from," said Leo Strine, of counsel at Wachtell, Lipton, Rosen and Katz and a former chief justice of the Delaware Supreme Court.
A new dynamic, for example, is that political leaders are now getting involved in deals. Earlier this year, Trump announced that Nippon Steel, which had made a bid to buy U.S. Steel but was blocked, would make an investment.
This also suggests that other global leaders may weigh in on deals, something the people said could add to the amount of time it will now take deals to get done.
