M&A activity insights: April 2025

M&A activity continues to be muted by economic and policy uncertainties.

In brief

• Deal value for M&A activity increased in March 2025 for transactions of more than US$100m.
• The technology, consumer products and retail, and aerospace & defense, mobility sectors were drivers of corporate M&A.

US M&A activity showed a mixed picture in March, with large deals helping to drive an increase in deal value over the year-earlier period, but the number of deals falling amid continued economic and policy uncertainty.

First quarter overall transaction trends were positive, with mid-market deal value up 3.3% versus 1Q24. However, in March, large transactions notably in the technology and consumer products sectors pushed deal value for transactions over US$100m to US$217b, a 25% increase from March 2024. The number of deals told another story in March. US M&A volume declined, reflecting ongoing market uncertainties. Initial hopes for a strong M&A environment under the new administration have not materialized yet amid uncertainty over tariffs and other factors, resulting in many stalled or canceled deals.

Key factors that are expected to contribute to slower economic activity in the coming months include fragile private sector and consumer confidence, slower disposable income growth, fading fiscal tailwinds, rising tariffs, higher interest rates, and surging policy uncertainty and market volatility.

Monthly M&A trend (2022 onwards)

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

Source: EY Insights analysis and Dealogic

In March 2025, the value of transactions over US$100m increased 106.7% from February 2025. Transaction volume, however, of 112 deals, reflects a decline of 8.9% year-over-year (YoY) and a drop of 10.4% month-over-month (MoM) from March 2024 and February 2025, respectively. In March, there were 8 mega deals¹ totalling US$113b in value, compared to only 3 such deals in February 2025. Private equity (PE) activity accounted for almost 50% of these big-ticket transactions.

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

Sectors that fueled this month’s deal activity:

Source: EY Insights analysis and Dealogic

Cautious optimism surrounds mid-market activity despite monthly dip

In March 2025, mid-market deal activity declined, with deal value down by 24% and volume down by 31% compared to February. However, first quarter mid-market deal value rose 3.3% YoY, reaching US$84b (vs US$81b in 1Q24), and deal volume increased by 2.6% to 275 deals (vs 268 deals in 1Q24).

Key factors that may drive mid-market deal activity in the coming months include availability of substantial dry powder from financial sponsors and high scalability potential of these businesses that makes them attractive targets even in a slow market.

Additional risks revealed in 1Q25 include:

• Economic slowdown concerns, fueled by a possible recession, which could create a cautious investment climate and reduce M&A activity
• Mega deals in the tech and consumer product sectors possibly face tougher government scrutiny, resulting in potential delays in deal closings
• Rising core inflation forecasts and an increase in projections for a higher year-end unemployment rate
• Growing concerns over trade conflicts due to new policy announcements under the Trump administration
  

Looking ahead

Key factors that are expected to contribute to slower economic activity in the coming months include slower disposable income growth, fading fiscal tailwinds, tariffs, higher interest rates, surging policy uncertainty and market volatility. The likelihood of a recession within the next 12 months stands at approximately 40%.

However, key labor policy updates influenced by immigration changes are likely to encourage companies to pursue strategic acquisitions aimed at enhancing workforce capabilities, particularly in sectors that rely on undocumented workers. This trend could lead to deals aimed at filling labor gaps and expanding operational capacity.

Additionally, tariffs are expected to increase costs and weaken economic sentiment, which may lead to reduced spending and investment. The ongoing market volatility is also likely to prompt businesses to continue investing in automation. The coming months will be pivotal for M&A activity as market participants seek clarity and stability in an evolving regulatory environment. As such, we see a guarded approach towards M&A activity across most sectors.

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