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M&A activity insights: May 2025

US M&A activity fell in April as business leaders seek more clarity on tariffs and their impacts.


In brief
  • Concern about tariffs and economic uncertainty weighed on US M&A activity in April 2025.
  • Corporate and private equity investment in technology and consolidative dealmaking in the tech, health and financial sectors, remain encouraging.

US M&A activity declined in April amid economic and trade uncertainties and a weak growth outlook.
With President Donald Trump's far-reaching tariff announcements in early April, the monthly volume of deals exceeding US$100m fell 18.7% from March. The value of such deals fell 51.3% as fewer US mega-deals1 occurred in April relative to March, though tech transactions were a bright spot. Year-over-year (YoY), deal volume fell 24.8%, while deal value declined 8.6%.2

Business leaders have adopted a wait-and-see approach to critical investment decisions due to the lack of clarity on US tariff implementation timelines, scope and retaliatory measures.

Tariff disputes raise the specter of escalated risk and broader economic disruptions, while related financial market volatility also gave decision makers pause. These factors are expected to significantly influence M&A activity in the coming months as companies navigate through an increasingly complex economic landscape. About 25% of private equity (PE) general partners reported deal disruptions due to tariff concerns, while 43% fear widening credit spreads may hinder financing efforts, according to the April EY Private Equity Pulse survey.

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US tariff announcements in early April altered the global economic and financial landscape. The US economy shrank 0.3% in Q1 2025, the first quarterly contraction since early 2022. The latest EY US economic outlook reflects downward revisions in estimates for real GDP growth to 1.1% for both 2025 and 2026, compared to previous forecasts of 1.7% and 1.6%, respectively.3

Monthly M&A trend (2022 onwards)

Deal value (US$100m+); Deal volume (US$100m+)

ey-monthly-m&a_trends_chart-may

Source: EY Insights analysis and Dealogic


In April, for deals exceeding US$100m in value, corporate M&A volume dropped to 73 deals (down 30.5% YoY), while PE deal volume fell to 27 deals, (down 3.6% YoY). Looking forward, the EY-Parthenon Deal Barometer projects flat corporate M&A volumes for 2025, and PE deal volume growth of roughly 1%.

US sector breakdown for top deals (US$100m+) – April 2025

Sectors that fueled this month’s deal activity:

Sectors that fueled this months deal activity chart

Source: EY Insights analysis and Dealogic


Technology sector continues to drive deal value for this year

 

Despite the ongoing uncertainty surrounding tariffs, the technology sector continues to demonstrate resilience. So far in 2025, the technology sector has been a top performer with 165 deals valued at more than US$100m+ and a cumulative deal value of US$236b. Roughly 56% of April’s billion-dollar-plus deals by value were from the technology sector. Businesses are ramping up their investments in AI-powered innovations, cloud infrastructure and cybersecurity solutions that play a critical role in long-term growth and competitiveness.

 

Companies are using strategic divestment to unlock value

 

Tariffs have introduced significant volatility in global trade, forcing businesses to reassess their cost structures and competitive positioning.

 

Companies are streamlining their portfolios and focusing on core operations by divesting non-core businesses to improve financial stability and allocate resources more effectively. Pressure on boards from activist investors continues to drive spin-offs, carve-outs and subsidiary sell offs. Sponsors are helping companies address immediate supply chain and operational challenges and explore strategic long-term shifts. Portfolio companies are also reevaluating manufacturing footprints.

 

Geopolitical dynamics reshaping M&A landscape

 

The geopolitical landscape is weighing on corporations; requisite asset realignment and supply chain challenges today may present opportunity tomorrow.

 

Globally, conflicts and instability, combined with trade negotiations, may mean companies need to consider a complex business reassessment. This might include assessing risk scenarios and the impact on profitability. National security concerns are crucial in M&A considerations including the location of mission-critical assets, and the safety and reliability of supply chains and trade routes.

 

There could be M&A opportunities in the uncertainty as well. For example, rising government defense budgets in response to heightened geopolitical tensions could boost US deal activity within the aerospace and defense (A&D) sector.

Key Deal Drivers for this month:

  • AI-powered capabilities and cloud solutions to strengthen competitiveness and innovation are driving companies doing high-value technology deals
  • Businesses are divesting non-core assets to streamline operations and strengthen financial resilience
  • Consolidation continues to drive transactions in sectors such as health care, technology, and financial services to strengthen market positions
  • Robust activity from PE firms, with a focus on strategic investments in high-growth sectors

Risks to dealmaking in 2025 include:

  • Recent uncertainty around interest rates and global tensions could potentially deter companies from pursuing large-scale acquisitions
  • Core inflation projections are increasing, coupled with higher year-end unemployment rate forecasts. In the US, one-year household inflation expectations reached 6.7% YoY in April (the highest level since 1981)4
  • New Trump administration policy announcements, including sector-specific tariff measures, are escalating trade tensions and impacting deal-making momentum.

Looking ahead

Deal activity could pick up in the coming months if greater certainty emerges around US tariff policy. Private equity dealmakers remain well-capitalized and motivated to expand. In addition, owners can leverage robust valuations to set themselves apart.

At the same time, the latest EY US economic outlook indicates higher tariffs will result in renewed inflationary pressures in the coming quarters, with core CPI inflation projected to close 2025 between 3.5% - 4%. The higher cost of doing business impacts dealmaking, especially if buyers lower their bids for assets as a result.

Opportunities also are emerging as funds focused on distressed and special situations gear up for potential investments in discounted assets, particularly in sectors such as logistics, energy transition and digital infrastructure.

Sudhanshu Wasan, Associate Director, and Karan Chowdhary, Assistant Director, from EY Americas Accounts Insights, contributed to this document.

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Summary 

US M&A activity declined in April 2025 despite strength in technology sector transactions and sector consolidation in tech, health care and financial services. Tariff, trade and geopolitical tensions are slowing dealmaker decisions, and impacting both corporate and private equity (PE) investment. Given the volume of PE dry powder for investing, there is potential for increased deal activity if clarity on US tariff policies improves.

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