The slow start to mergers and acquisitions activity in 2025 is likely just a temporary blip, mostly due to tariff uncertainty.
The U.S. post-election environment in the last two months of 2024 saw an expectation for more deal making.
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The one deal seen so far is a $900 million planned acquisition of the Helly Hansen brand by Kontoor that’s expected to close in the second quarter. Another possibly in the works centers on rumblings that Capri Holdings could be in talks to sell its Versace brand to Prada.
“It’s almost as if we’ve seen a light switch turn on since the election in the U.S.,” Anton Sahazizian, managing director and global head of M&A at Moelis & Company and the firm’s former head of U.S. M&A, said during a webinar hosted by S&P Global Market Intelligence. He said there was a backlog of deals and was expecting to see the start of an acceleration of deal completions in early 2025. At the time, he described the backlog levels as “very full,” adding that pitch activity was also increasing.
Another webinar participant, Jay Hofmann, a managing director and the co-head of J.P. Morgan’s North American M&A business, said the recovery was due to rising confidence levels and the impact of the new administration on M&A activity.
While there’s been some M&A talk, robust isn’t exactly how one would describe deal activity in 2025 thus far. So what happened?
“At post election, everyone came up with our forecast that, OK, we have a Republican administration, we have a Republican Senate, Republican House. It’s going to be great for the M&A market. We’re gonna see a lot of activity. Markets are gonna be hot. We haven’t seen that,” said Jeremy Swan, national director at CohnReznick’s financial sponsors and financial services industry practice and head of the firm’s M&A consulting services practice. He spoke at a company webinar last week on “New Administration Policy & Priorities: Strategies to Consider Right Now.”
“In fact, we’ve seen the first couple months of this year being relatively slow from a transaction perspective. While we do expect that to pick up. We do see backlog starting to come off,” he said. Swan said the “uncertainty” of what’s going on with tariffs has impacted M&A activity.
Part of the reason is due to questions over how inflation might be impacted by tariffs. And because deals have to be financed, there are now financing questions as well. “How is the Fed going to react and what changes will there be in rates?”