The sweeping trade tariffs by the Trump administration have caused disruptions in M&A activity globally as investors and sellers wait for the markets to fully absorb the impact of the new trade wars.
The latest Deal Drivers report published by Datasite and Mergermarket looks at the emerging trends offset by geopolitical equations and economic upheavals that are driving M&A in the major regions and sectors of the world.
Datasite Finds US Powerhouses Distract from Tariff Mayhem
The US hit a speed bump in Q1, with growth decelerating by 40bps to 2% annualized. Even with easing signs of inflation (consumer price index fell 2.8% from March last year) the newly announced tariffs are anticipated to create upward price pressures, greatly complicating the Fed’s policy decisions.
Amid this renewed sense of uncertainty, M&A in the Americas as a whole fell back in Q1. Deal volume reached 2,657, a 27.7% year-on-year drop, with an aggregate value of US$540bn, a 7.6% decline. This is the lowest transaction tally in at least three years, though value is still running high by historic standards.
A handful of large deals mask underlying M&A market softness. In Q1’s standout deal, Google parent Alphabet put up US$32bn to purchase rapidly growing security start-up Wiz. The acquisition will integrate Wiz’s application protection capabilities into Google Cloud, better serving its enterprise customers.
Northeastern US towers in the region, with 763 ‘companies for sale’ stories tracked by Mergermarket, almost a third of all stories across the Americas. This emphatic lead is driven by intense potential activity across technology, media & telecoms (TMT), and pharma, medical & biotech (PMB). Biotech innovation centered in Boston and the New York-New Jersey corridor also continues to attract bidders.
EMEA Takes Solace in Handful of Megadeals
Although inflation in Europe is rapidly declining, paving the way for more accommodative monetary policy, this was not enough to materially revive risk appetites in Q1. Sluggish growth expectations and uncertainty around the effect of US trade policy on earnings are now weighing on corporate confidence. Some buyers are opting to remain on the sidelines, and this hesitancy was reflected in deal activity.
M&A experienced a sharp contraction in Q1, with deal volume dropping to 3,092 – a 34.2% year-on-year fall. This marks the lowest quarterly total in at least the past three years and reflects a steep falloff in transaction count after a stable 2024.
Despite this downturn, aggregate M&A value held up comparatively well. This metric reached €242.6bn, up 22% from €198.8bn a year earlier and broadly in line with the previous quarter. Overall, there are reasons for optimism in the fact that, so far this year, buyers are spending more, pushing up mean deal sizes.
TMT remained the most active sector with 695 deals announced, despite a sharp 34.2% drop year-on-year. Business services followed with 497 transactions, a 24.6% dip, while industrials & chemicals (I&C) experienced the steepest fall of the three, declining by 37.2% to 446 deals.
Middle Eastern acquirers sharply increased their investments in Europe last year, with strategic deal value for targets on the continent surging by 120%, according to Bain & Company. This flow of capital is providing a vital boost to European M&A, helping to offset domestic weaknesses.
Domestic Demand Animates APAC M&A
The first quarter of 2025 saw a systematic move by Beijing to reinforce state entities it already owns. Four of the five largest transactions across APAC fell in this category. An impressive US$276bn registered in deal value in Q1, a remarkable 87.9% year-on-year increase that owed almost everything to a handful of juggernaut transactions in China.
Overall, there were fewer deals, but more dollars: that was the defining story for APAC M&A activity in Q1 2025. Deal volume fell to 2,316 transactions, a year-on-year decline of 12% and marking the lowest quarterly deal count since Q3 2022.
Japan, supercharged by a weak yen and a newly investor-friendly corporate governance environment, stood out, attracting deployment from international private equity (PE) sponsors. Southeast Asia has emerged as the second-hottest region with 256 stories,18% of the regional total. India’s outlook is also spearheaded by TMT (43 stories, 23% of the national total), which speaks to its massive, rapidly digitizing population and thriving tech ecosystem.
Financial services blew past every other sector to record the highest aggregate value. The industry saw US$90.5bn worth of deals in Q1, a more than sevenfold increase year-on-year and more than double the typically dominant TMT sector.
APAC’s largest deal of Q1 saw Bank of China, one of the ‘Big Four’ state banks, receive a US$22.7bn capital infusion. Greater China is the clear locus of anticipated activity, accounting for 566 stories. The I&C sector leads decisively with 195 potential deals reflecting China’s continued emphasis on domestic self-sufficiency.
Learn more about latest dealmaking trends and how M&A is faring across globe, including advisor league tables, by visiting Datasite’s Deal Drivers Hub.
About Datasite and Grata
Datasite is a global SaaS provider of AI-powered workflow collaboration and automation solutions for M&A, investment and strategic projects. Datasite’s innovative products drive execution, while generating unique data insights to empower knowledge workers around the world to succeed across the entire project lifecycle. For more information, visit www.datasite.com
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