The United States’ M&A market in 2025 faces a shifting landscape shaped by key economic and political developments expected under the incoming Republican administration. 

With post-election uncertainty largely alleviated and recession concerns easing, businesses are navigating a more stable environment for strategic decision-making. Interest rates are trending downward with expectations of continued cuts, although perhaps not as quickly as first envisioned, which could potentially provide a more favorable financing climate for transactions in the coming year. Additionally, potential changes in regulatory focus and tax policy under the new administration are expected to influence deal-making dynamics. Furthermore, the push for U.S. onshoring and efforts to mitigate the impact of tariffs are likely to drive acquisitions aimed at strengthening domestic supply chains. Staying informed on these evolving trends will be critical for navigating the M&A market in 2025.

EASING ECONOMIC CONCERNS

With the conclusion of the November 2024 U.S. elections, much of the uncertainty in the market has dissipated regarding anticipated economic policies, key regulatory appointments and corporate tax rates, all of which factor into M&A deal economics. Pre-election uncertainty led to some hesitation and risk aversion in M&A markets and contributed to an 8-percent YoY decline in U.S. M&A volume in 2024. This uncertainty is now in the rear-view mirror, which will allow business owners, CEOs, private equity (PE) and other stakeholders to have a clearer picture of opportunities and the economic road ahead and are now better positioned to actively pursue and close M&A deals. However, it is worth noting that Trump’s previous tenure as president consisted of some abrupt policy changes and trade disputes that could result in an uncertain economic environment if similar patterns emerge.

With the U.S. economy producing annual growth above two percent in 2024, consumer confidence and consumer spending reaching new heights post-election and all-time highs in the NASDAQ and Dow Jones, which is a signal of strong investor confidence and that fears of a recession in the U.S. appear to be subsiding. Specifically relating to the M&A market, the significant market gains and high valuations will allow companies to leverage their stock as a valuable asset for acquisitions, which can simplify and enhance the appeal of pursuing M&A deals. In the private market, rising valuations often incentivize private companies to explore sale opportunities, while robust consumer demand enhances the appeal of acquisitions for buyers, likely driving an uptick in transaction volume.

INTEREST RATES

In addition to these factors, the lowering of interest rates will result in easier access to capital by reducing the cost of borrowing and make it more affordable for companies to finance acquisitions. As a result, potential transactions will become more financially viable for businesses and the lower rates should ultimately drive higher activity in the market. This lower cost of capital generally coincides with higher valuations in the M&A market as well. While the Federal Reserve has lowered interest rates by 25 to 50 basis points in each of the last three FOMC meetings, there is potential for rate cuts to cease or even for rates to increase in 2025 if progress on combatting inflation slows as a result of new tariffs or any other factors. However, experts predict additional cuts in the coming months to be the most likely outcome, further stimulating U.S. M&A market activity in 2025. 

REGULATORY POLICY

The Biden administration took an aggressive stance on antitrust enforcement by seeking to curb corporate consolidation in various industries throughout the past four years. This heightened scrutiny and greater willingness to challenge potential acquisitions had a cooling effect on the M&A market and could potentially lead to deregulation and pent-up demand driving M&A growth in 2025. 

This position is expected to change in the coming year as Assistant Attorney General Jonathan Kanter at the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) Chair Lina Khan are both replaced with new appointees. Trump’s new appointments, Andrew Ferguson as Chair of the FTC and Gail Slater as Assistant Attorney General of the DOJ Antitrust Division, are expected to adopt a more free-market approach compared to the previous administration. However, there is potential that the new appointees will continue some aspects of the previous administration’s rigorous antitrust enforcement, especially in Big Tech, where JD Vance and others in the Trump administration have expressed concerns over large tech monopolies, censorship and subsidies. Overall, while a less interventionist regulatory M&A environment is anticipated under Trump’s new appointees, selective industries and circumstances could still see strong antitrust enforcement.

TAX POLICY 

Proposed changes to the U.S. capital gains and corporate tax rates would have a significant impact on the U.S. M&A market in 2025 as well. While no official policy has been announced, the Trump administration has signaled their intentions to reduce long-term capital gains tax rates from 20 percent to 15 percent. Additionally, President Trump stated his interest in further reducing the corporate tax rate to 15 percent for companies making their products in the U.S. after permanently reducing the rate from 35 percent to 21 percent during his last term. These policies would increase after-tax returns for potential sellers and potentially drive higher valuations. The lower tax rates for companies producing goods domestically could also drive significant additional investment into the U.S. domestic manufacturing sector, likely stimulating further activity in the M&A market in the coming year. 

ONSHORING

President Trump made reducing reliance on foreign imports and strengthening domestic supply chains a core policy promise of his 2024 presidential campaign. Whether via tariffs, tax incentives, grants or through other policy proposals, the Trump administration seeks to encourage investment in U.S.-based manufacturing. While economic commentators are divided on whether tariffs will increase costs to consumers or stimulate growth, it is expected that these protectionist policies will incentivize additional investment in domestic suppliers who will benefit from policy designed to give them an advantage over foreign manufacturers. 

Broadly, this should stimulate domestic-focused M&A activity from U.S. corporations, foreign multi-nationals targeted by tariffs, private equity, venture capital and other investors. Specifically, the defense, semiconductor, energy, infrastructure materials and other industries of key strategic importance to the U.S. will likely benefit from increased investment. 

Conversely, Trump’s policies would make offshoring and overseas manufacturing more expensive. Overseas manufacturers, export-oriented companies facing retaliatory tariffs and manufacturing companies reliant on imported inputs will face significant challenges and potentially reduced interest in the M&A market as a result of increased costs, diminished margins and heightened uncertainty.

CONCLUSION

The U.S. M&A market in 2025 faces a unique blend of opportunities and challenges. On one hand, easing economic uncertainty, declining interest rates and potential pro-business tax reforms create fertile ground for deal-making. On the other, persistent concerns over tariff impacts, selective antitrust scrutiny and sector-specific challenges may temper growth in certain areas. Overall, as the dust settles post-election, the U.S. M&A market appears poised for a resurgence, driven by lower taxes, easier access to capital, reduced regulations and policies targeted at increasing investment into the United States.

GHJ is prepared to assist business owners and potential acquirers to make the most of this resurging M&A landscape by assisting in assessing strategic options, preparing for the acquisition process, evaluating the tax implications of potential transactions and providing ongoing support throughout the sale process. 

To learn more about the evolving deal landscape, please reach out to GHJ’s Transaction Advisory Services Practice.