M&A activity insights: June 2025

In brief

• US M&A activity surged in May with easing trade tensions encouraging investment.
• The value of deals in May rose compared to the prior month and prior year, driven by several megadeals.
• Deal-makers continue to focus on the economic outlook; expectations today rest on potential rate cuts later in the year.

Mergers and acquisitions (M&A) in the US bounced back in May, buoyed by easing trade tensions that boosted deal momentum, including several large transactions.

The number of deals of more than $100m rose 6.1% in May compared to April, though deal volume declined 6.2% from May 2024, according to EY-Parthenon analysis of Dealogic data. The total value of deals at that level jumped 39.0% relative to April and rose 68.3% compared to May 2024. The big-ticket transactions across sectors included a megadeal in the media and entertainment industry; a large, cross-border energy deal and transactions in chemicals and technology. Corporate deals accounted for roughly 60% of the $202b in May deal value, for transactions above $100m.

Large transactions coincided with some easing of tariff concerns; the US reached a trade agreement with the UK and mutually agreed with China to reduce tariffs and negotiate. Greater clarity on trade rhetoric and interest rate expectations is reflected in the EY-Parthenon forecasts for growth ahead. The EY Economic Outlook reflects positive revisions in the second quarter, with real GDP growth for both 2025 and 2026 revised upward to 1.3%, and the probability of a recession within the next 12 months lowered to 35% from 45%.

The US economic landscape, however, is complex, with fiscal strain and policy uncertainty. The EY-Parthenon economic team expects the Federal Reserve to cut interest rates twice this year, down from the previously expected three, with the first cut likely in September.

Monthly M&A trend (2022 onwards)

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

Source: EY Insights analysis and Dealogic

Deal activity increased across multiple sectors, driven by consolidation and technology investments. Media and entertainment deals saw remarkable growth with companies seeking content diversification and strategic mergers. Clean energy investments in the power and utilities industry also fueled noteworthy momentum.

Focus on AI

Artificial Intelligence (AI) is a strategic priority driving growth in investment and innovation as businesses seek a competitive advantage. Transactions centered on three key areas: the development and expansion of AI-driven offerings, investment in AI infrastructure and the adoption of responsible AI. Additionally, technology giants are forging agreements with nuclear energy providers to meet the increasing power needs of data centers and AI operations.

In May, AI deals represented roughly 14% of deal value for acquisitions exceeding US$1b, according to EY-Parthenon analysis of Dealogic data.

Portfolio expansion

Portfolio expansion has emerged as a dominant theme in M&A across sectors. Companies are increasingly pursuing strategic acquisitions not merely for scale, but to diversify their offerings, enter adjacent markets and accelerate innovation. These moves reflect a broader shift toward building resilient, future-ready portfolios. This trend underscores a proactive approach to growth, where acquiring complementary capabilities, talent and technologies is key to staying competitive in rapidly evolving sectors.

Key Deal Drivers for this month:

• Divestment continues to serve as a strategic lever for companies to unlock value, streamline operations and navigate tariff-driven volatility.
• Demand for AI data centers remains strong and AI stocks continue to rise.
• Strong corporate consolidation continues as companies seek strategic advantages and long-term stability through integration to address evolving consumer demand and digital transformation.
• Private equity acquirers remain active, targeting strategic investments across sectors.
• Large-scale M&A activity gained momentum as favorable tariff-related policy changes encouraged companies to pursue deals.

Additional risks to dealmaking in 2Q25 include

• Persistent and elevated inflation remains a risk for the US economy, especially if growth and employment weaken.
• Higher bond yields remain a headwind, increasing financing costs and reducing asset prices.
• Valuation mismatches were headwinds for some deals.

Looking ahead

The recent boost in deal activity signals a resilient and moderately opportunistic M&A environment. However, persistent valuation gaps continue to temper market enthusiasm and could emerge as a key headwind for future transactions. According to the EY-Parthenon CEO Outlook Survey, 71% of respondents identify valuation mismatches as a major challenge that could dampen deal momentum over the next year. Despite these uncertainties, 57% of CEOs remain committed to leveraging M&A as a strategic tool for transformation and long-term growth.

The Federal Reserve’s interest rate policy remains a key influence on market sentiment. Potential rate easing in the second half of 2025 could support deal momentum, depending on economic and geopolitical factors.

Navigating this environment will require disciplined valuation strategies, close monitoring of policy shifts and a proactive approach to geopolitical developments.

Thank you to Sudhanshu Wasan, Associate Director, and Karan Chowdhary, Assistant Director, from EY Americas Accounts Insights, who contributed to this article.