A notable dissonance between economic sentiment and financial activity has begun to surface more prominently in 2025. While consumer behavior on Main Street continues to reflect cautious optimism despite looming economic concerns, a parallel contradiction has been observed on Wall Street. Preliminary data compiled by LSEG has indicated that global merger and acquisition (M&A) activity saw a substantial rise of 30% year-on-year, amounting to $1.9 trillion in the first half of 2025. This robust uptick has occurred even as overall investor and executive sentiment has been clouded by economic volatility, geopolitical strife, and protectionist trade policies.
It has been reported that expectations for an M&A resurgence had been seeded in late 2024, largely spurred by political developments. The return of Donald Trump to the White House was said to have reignited a sense of economic anticipation among corporate executives, who expected deregulation and corporate tax relief to pave the way for aggressive capital deployment. Strategic forecasts, including one issued by Morgan Stanley in November 2024, had projected that such conditions could potentially drive a 50% increase in merger volumes during the current year.
However, those optimistic forecasts were later tempered by unforeseen disruptions. U.S. tariffs and an escalating conflict in the Middle East are believed to have had a destabilizing effect on global stock markets and made corporate financial planning more unpredictable. The result was a subdued 13% growth in M&A activity during the first quarter of 2025, reflecting the cautious mood of corporate leaders. This shift in tone was further supported by data from the Conference Board, which noted that CEO confidence had plummeted to levels not witnessed in over fifty years.
These firms, although facing difficulties in divesting older portfolio companies, were able to execute a 25% increase in buyouts during the first six months of the year. Such figures highlighted that while the environment was far from ideal, deal-making activity had not ground to a halt.
Leadership from companies such as Alphabet, Toyota Motor, and Charter Communications was seen spearheading a surge in mega-deals, each valued at $5 billion or more. A total of 64 such transactions had been recorded, collectively accounting for $830 billion, or 44% of total global M&A volume through June 2025. This marked the highest proportion of large deals since 2019 and was perceived as a silver lining for investment banks, whose revenues are heavily reliant on large-scale transactions.
Executives in the advisory space also weighed in on the current state of affairs. Nonetheless, he had also suggested that his firm’s pipeline of prospective deals was among the most robust in its history, signaling confidence in continued M&A momentum.
However, cautionary notes have also been issued with respect to this overreliance on mega-mergers. Historical data has shown that when deals exceeding $5 billion made up more than 40% of all M&A activity in the first half of the year, it often signaled a subsequent cooling in the market. Such patterns were observed in 2007, 2015, and 2019—all of which were followed by declines in deal-making activity. In the current year, a decline of 11% in the overall number of deals—to below 23,000, the lowest in five years—has raised concerns that the market is being artificially buoyed by a few outsized transactions.
Moreover, analysts tracking the M&A-to-market-capitalization ratio have pointed out that this crucial metric has only been recovering slowly toward its 15-year average. This suggests that while the dollar value of deals has risen, the breadth and diversity of transactions remain limited, which may expose the market to future instability.
Among the standout deals in the first half of 2025 were Charter Communications’ $35 billion acquisition of Cox Communications and Alphabet’s $32 billion agreement to acquire cybersecurity firm Wiz. Such large deals have been instrumental in lifting overall M&A figures. On the advisory front, Goldman Sachs was ranked as the top M&A advisor, followed by Morgan Stanley, JPMorgan, Citi, and Barclays. Wells Fargo, which had previously been further down the list, climbed six positions to secure a place among the top ten.
In conclusion, while the first half of 2025 has shown an impressive resurgence in global M&A activity, underpinned by massive transactions and bold leadership, questions remain about the sustainability of this growth. The disconnect between macroeconomic caution and deal-making enthusiasm continues to be closely monitored, with the remainder of the year likely to test whether the current momentum can be maintained.
