Hunt Scanlon Reports ‘M&A Whiplash’ As Policy Uncertainty Sets In

May 9, 2025 – In EY-Parthenon’s latest Deal Barometer, the message is clear: expect a more subdued M&A environment this year. After a strong rebound in 2024, the market is losing steam as macro headwinds begin to bite.

Deal volumes for transactions over $100 million are forecast to rise just one percent in 2025, following a 19 percent gain last year. According to EY, “corporate M&A volumes are projected to remain flat in 2025 – totaling 1,142 deals,” while private equity activity is expected to notch only a “modest one percent increase, totaling 407 transactions.”

Behind the slowdown are multiple drag factors: tariffs, slower income growth, fading fiscal support, and persistently high interest rates. EY-Parthenon notes, “…slower disposable income growth, fading fiscal support and still-elevated interest rates” are eroding business sentiment.

These forces aren’t just economic abstractions, says Evan Berta, an associate at Hunt Scanlon Ventures, the leading M&A advisor to executive search firms. “They’re actively weighing on boardroom confidence and making decision-makers hesitant to move forward on strategic acquisitions.”

Stalling Activity

The trade landscape changed dramatically just 30 days ago with the announcement of a “10% universal tariff on all imports” and a 145 percent rate on Chinese goods. According to EY-Parthenon, this caused “a material shift” in the global economic and financial outlook.

The implications are significant, notes Mr. Berta, as dealmakers now face an increasingly unpredictable regulatory and trade backdrop, forcing them to model a much wider range of downside risks.

Uncertainty around how tariffs will be implemented, or how other countries might respond, is fueling hesitation.

“The lack of clarity around implementation timelines, scope and retaliatory measures has prompted many business leaders across sectors to pause investment decisions, including capex and talent,” said EY.

This highlights that strategic investments are being delayed not because opportunities aren’t there, but because leaders are unsure how the macro environment might evolve in the next few quarters.

As a result, EY-Parthenon revised its GDP growth forecast for the U.S. to 1.1 percent for both 2025 and 2026, significantly down from previous estimates. This underscores a broader theme: when growth is scarce, capital becomes more cautious.

Risk Appetite is Tapering

Corporate deal-making remains active, but the risk appetite is tapering. EY-Parthenon projects flat growth in corporate M&A, with 1,142 deals expected for 2025. That’s in line with last year’s strong rebound, but momentum is clearly slowing.

Related: Forces Shaping the 2025 Dealmaking Boom

What’s striking is the divergence in possible outcomes. In a more optimistic macro scenario, lower rates, cooler inflation, and stronger growth, deal volume could rise six percent. But if headwinds intensify, it could fall six percent.

The dual-path forecast reflects a market increasingly dependent on external signals from the Fed, inflation data, and geopolitical developments.

M&A Outlook Points to Accelerating Deal Flow

The global mergers and acquisitions landscape is poised for a gradual recovery following three years of subdued deal activity, according to Bain & Company’s newly released Global M&A Report 2025. While persistent macroeconomic headwinds, including high interest rates and regulatory scrutiny, dampened dealmaking last year, the outlook for 2025 suggests renewed optimism. Bain’s analysis highlights shifting dynamics in M&A, with companies adapting to a new dealmaking environment that prioritizes scale transactions, accelerated synergy realization, and generative AI-driven efficiency.

“Momentum will likely slow,” EY-Parthenon warns. That doesn’t mean the market will freeze, but it does suggest that boards and deal teams will be far more selective, focusing on must-do acquisitions rather than opportunistic plays.

Waiting for Clarity

Private equity, flush with dry powder, is in a holding pattern. The projected one percent increase in deal volume is tepid, especially coming off a 23 percent surge in 2024. But context matters; PE firms aren’t out of the game, they’re just recalibrating.

High interest rates are reshaping deal math. Sponsor-backed transactions are more difficult to finance at scale, and that’s translating into slower execution across the board. Still, EY-Parthenon believes the optionality is there. In a bullish environment, PE deal volume could grow by 20 percent; in a more constrained scenario, it could fall by 14 percent.

Related: Hunt Scanlon Ventures Serves as Strategic Advisor in ZRG’s Acquisition of Aspen Leadership Group

This range reflects just how much economic confidence is driving activity. Many firms are sitting on capital and waiting for better clarity on financing conditions, valuation resets, and market stabilization.

Tariffs are Deal Killers

The EY-Parthenon report doesn’t just cite trade as a headline risk, it shows the tangible impact. “About 25 percent of general partners say their portfolio companies have had deals withdrawn or delayed as a result of tariff concerns.” That statistic underlines the real-world consequences, that tariffs aren’t just affecting cost structures; they’re killing deals.

More sponsors are diving deeper into their supply chains, trying to understand where exposure exists and how they might pivot.

“Eighty-seven percent of general partner respondents say they’re working with portfolio companies to understand the impacts across the supply chain,” up 17 percentage points in just three months. That surge shows how rapidly this issue has moved to the top of the agenda.

Meanwhile, debt markets are tightening. “Forty-three percent say they’re worried about being able to put together financing packages as spreads begin to widen in the leveraged finance markets.” Financing stress adds another layer of complexity to deals, particularly those requiring large capital stacks or cross-border coordination.

When to Pounce

Despite the volatility, strategic buyers and PE firms alike are positioning to act when dislocations emerge. EY-Parthenon emphasizes that “market dislocations often lead firms to become more opportunistic as they look to capitalize on potential mispricing.” This is the window where experienced investors shine, and where macro instability creates pricing opportunities others hesitate to pursue.

Private credit is poised to continue its ascent, stepping in where syndicated loans become less viable. And in sectors like aerospace and defense, the report notes growing PE interest as geopolitical shifts prompt increased government spending and long-term tailwinds.

The bottom line says Mr. Berta: “The M&A market is cooler, but not frozen. Dealmakers that stay alert, adaptable, and ready to strike when the signal is right will be the ones that lead the next wave of deals.”

Reprinted from with permission from ExitUp!

Contributed by Scott A. Scanlon, Co-CEO, Evan Berta, associate – Hunt Scanlon Ventures