In the face of unexpected market volatility and geopolitical uncertainties, dealmakers are adopting a more cautious stance for the upcoming weeks and months while remaining optimistic about an increase in mergers and acquisitions later this year.
Scott Barshay, a partner at Paul Weiss and a prominent figure on Wall Street, noted that although clients are currently in a "waiting and seeing" mode, he anticipates a surge in significant deal announcements in the coming months.
Recently, industry experts from various locations worldwide gathered in New Orleans for the Tulane Corporate Law Institute conference to discuss industry trends and emerging concerns. Attendees highlighted the current unpredictability in Washington as a major factor affecting the market.
Data from Dealogic shows that M&A activity in the U.S. has been slow, with only 1,172 deals valued at $226.8 billion in the first two months of the year. This represents a significant decline compared to the same period last year, indicating the slowest start in almost two decades.
Jennifer Muller, from Houlihan Lokey, mentioned challenges in achieving predicted M&A deal volumes due to the uncertain start to the year. Despite this, she pinpointed potential deal opportunities in specific sectors such as technology, energy, and financials.
Despite the challenges posed by the current environment, speakers at the conference emphasized that the slowdown felt more like a temporary pause rather than a drastic drop in activity. They reported being diligently engaged in preparing for future mergers with available financial resources.
The landscape also includes pressure from activist investors and private equity funds on companies to make changes in response to evolving shareholder demands. The unpredictability extends to global trade policies, such as Trump's tariffs on goods from Canada and Mexico, adding another layer of uncertainty to the deal-making environment.