M&A Market Watch: Insights from the First Half of 2025


August 8, 2025

By: Eric R. Tubbs, Michael J. Dayton, Jason L. Giles

Although the M&A market faced various macroeconomic challenges during the first half of 2025, M&A activity has continued to persist. Through the first half of this year there have been nearly 25,000 M&A transactions with a combined value surpassing $2.0 trillion. This corresponds to a 16.2% increase in deal value when compared to last year.[1]

 

Despite this growth, uncertainty remains a consistent theme in today’s market.[2] Nyemaster M&A attorneys can advise clients navigating this evolving landscape. This article highlights key factors shaping M&A activity in 2025 and what clients should consider as they plan deals for the second half of the year.

 

M&A Drivers in 2025

 

GDP Changes: U.S. GDP fell 0.5% in the first quarter of 2025,[3] but increased by 3.0% in the second quarter.[4] The decrease in GDP during the first quarter was the result of a decrease in government spending and an increase in imports caused by impending tariffs.[5] Notably, the increase in GDP during the second quarter was due to a decrease in imports and an increase in consumer spending. Moreover, in June, the Federal Reserve decreased its GDP growth forecast to 1.4% for the year.[6] Nevertheless, although 30% of companies reported having paused deals due to tariff uncertainty, the market remains active with 51% of U.S. companies still pursuing M&A deals.[7]

 

Interest Rates & Inflation: Tariffs have contributed to rising prices for consumers. The Consumer Price Index increased 2.7% from June 2024 to June 2025.[8] However, inflation appears to be leveling off, averaging 2.6% for the first six months of 2025, down from 2.9% in 2024.[9]  The federal funds rate remains within the target range of 4.25% to 4.50%, currently sitting at 4.33%.[10] While the Federal Reserve has yet to cut interest rates, “most” staff at the Federal Reserve signaled a rate reduction is likely later this year.[11]

 

Government Initiatives: The passage of Donald Trump’s One Big Beautiful Bill Act (OBBBA) on July 4, 2025, will provide companies with several benefits and enhanced tax certainty. The OBBBA allows for the permanent election of 100% bonus depreciation under Section 168(k), enabling asset-heavy businesses to immediately deduct the full cost of qualified equipment in the year it is placed in service, rather than depreciating the asset over several years.[12] This front-loaded deduction significantly reduces a company’s tax liability in the year of acquisition, improving cash flow. The OBBBA also allows businesses to deduct domestic research and experimental (R&E) expenditures in the year incurred; previously companies were required to amortize R&E expenses over a 5-year period.[13] One final key highlight is an increase in the interest expense limitation. Previously interest expense was based on 30% of EBIT (earnings before interest and taxes), but now interest expense is based on EBITDA (earnings before interest, taxes, depreciation, and amortization) allowing businesses to take a higher deduction.[14]

 

Excess Private Equity Funds: Private equity (PE) firms have continued to hold onto roughly $1 trillion in unsold assets thereby impacting deal activity.[15] PE firms will be looking to deploy their excess capital as market conditions improve. As PE firms seek out investment opportunities deal activity will increase.

 

 

[1] PitchBook, Q2 2025 Global M&A Report (2025), https://pitchbook.com/news/reports/q2-2025-global-ma-report.
[2] PitchBook, Q1 2025 Global M&A Report (2025), https://pitchbook.com/news/reports/q1-2025-global-ma-report.
[3] Gross Domestic Product, 1st Quarter 2025 (Third Estimate), GDP by Industry, and Corporate Profits (Revised), U.S. Bureau of Econ. Analysis (June 26, 2025, at 8:30 AM), https://www.bea.gov/index.php/news/2025/gross-domestic-product-1st-quarter-2025-third-estimate-gdp-industry-and-corporate-profits.
[4] Gross Domestic Product, 2nd Quarter 2025 (Advance Estimate), U.S. Bureau of Econ. Analysis (July 30, 2025, at 8:30 AM), https://www.bea.gov/news/2025/gross-domestic-product-2nd-quarter-2025-advance-estimate.
[5] Brian Levy, Global M&A Industry Trends: 2025 Mid-Year Outlook, PWC (June 24, 2025), https://www.pwc.com/gx/en/services/deals/trends.html.
[6] FOMC Projections Materials, Accessible Version, Fed. Open Mkt. Comm. (June 18, 2025, at 2:00 PM), https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20250618.htm.
[7] Brian Levy, Global M&A Industry Trends: 2025 Mid-Year Outlook, PWC (June 24, 2025), https://www.pwc.com/gx/en/services/deals/trends.html.
[8] The Consumer Price Index Rose 2.7 Percent for the 12 Months Ending June 2025, U.S. Bureau of Lab. Stats. (July 18, 2025), https://www.bls.gov/opub/ted/2025/consumer-price-index-rose-2-7-percent-for-the-12-months-ending-june-2025.htm.
[9] Current US Inflation Rates: 2000-2025, U.S. Inflation Calculator, https://www.usinflationcalculator.com/inflation/current-inflation-rates.
[10] https://www.fedfundrate.org/
[11] Derek Saul, Most Fed Officials Expect 2025 Rate Cuts Despite Tariff Inflation Concerns, Minutes Show, Forbes (July 9, 2025), https://www.msn.com/en-us/money/markets/most-fed-officials-expect-2025-rate-cuts-despite-tariff-inflation-concerns-minutes-show/ar-AA1IhBTP?ocid=BingNewsSerp.
[12] One Big Beautiful Bill Act: Key Tax Impacts for Businesses, Vinson & Elkins (July 8, 2025), https://www.velaw.com/insights/one-big-beautiful-bill-act-key-tax-impacts-for-businesses.
[13] What the OBBBA Means for M&A: Welcome Tax Changes for Buyers and Sellers, Sikich (July 10, 2025), https://www.sikich.com/insight/obbba-m-and-a-tax-changes.
[14] Id.
[15] Sabrina Valle, Private Equity Sits on $1 Trillion Amid Uncertainties, M&A Stalls, PWC Says, Reuters (June 18, 2025, at 11:14 AM), https://www.reuters.com/business/private-equity-sits-1-trillion-amid-uncertainties-ma-stalls-pwc-says-2025-06-18.