Geopolitical Ruckus Is Turning M&A Into a Tightrope Act
When tensions flare on the global stage and trade agreements wobble like a house of cards, the merger and acquisition (M&A) landscape feels less like smooth sailing and more like a chaotic carnival ride.
Why Executives Still Throw Their Hats Into the Ring
- Bold Moves – Seasoned leaders aren’t letting the jitters stop them; they’re chasing opportunities with the same gusto as a street performer tackling a spinning wheel.
- Strategic Flexibility – They’re reshuffling tactics on the fly, adapting to every new political twist and every trade clause that feels like a plot twist in a thriller novel.
- High Stakes, High Rewards – Even with uncertainty looming, the payoff potential keeps the adrenaline pumping and the ambition alive.
Takeaway
In a world where geopolitics can pivot faster than a news ticker, the seasoned M&A sharks are steering through the chaos with a mix of nerves, nerves, and a dash of fearless optimism.
Why the M&A Market Is Still a Rollercoaster
After a dazzling comeback from the pandemic lull and a rough ride in 2023, 2024 seemed like the season of confidence for corporate movers and shakers – until the US trade wheel spun a wild twister.
The Global Pulse
“Even with stubborn macro forces – think looming recessions, geopolitical spill‑over, and fresh trade squalls – the worldwide M&A scene kept its swing in the first half of 2025,” notes Garrett Hinds, a senior research analyst at Pitchbook.
Deals that hit the big stage: 24,793 transactions, totaling a staggering $2.0 trillion.
That’s a 13.6 % jump from the previous year and a 16.2 % rise compared to the fold‑out period. The numbers are the kind of numbers that make investors do a double‑take on their spreadsheets.
Europe’s Coming‑Out‑of‑Cave Performance
- Deals in the first half of 2025 paved the way for a stellar scanner score across the continent.
- Repeated this hand in the second half and Europe could hit its most active M&A year in over a decade.
- Financial analysts predict a surge that’s as tasty as a summer buffet – all the right flavours and no sour notes.
In short, the marketplace may skip the news cycle, but the excitement under the hood stays roaring. In a world where uncertainty can feel like a bureaucratic maze, these numbers remind us that the deal‑making engine is still very much in motion, revving toward fresh opportunities.
The valuation gap
Deal Munkles: The Valuation Gap Saga
What Happened Last Year
After a tough stretch where rates were climbing and the world was on a roller‑coaster of uncertainty, 2023 finally felt like a breath of fresh air for deal‑makers. Yet, even as the market steadied, a stubborn problem kept negotiations in gridlock: buyers and sellers just couldn’t agree on what a company was worth.
Why Sellers Expect Big Bucks
Lorenzo Corte, the globe‑topping deal guru at Skadden, reminds us that company owners who bought their target in the 2020 M&A boom expect a juicy return in 2025. “We’re still chasing the golden goose,” he joked, “and the market has kept shifting the nest!”
But buyers? They’re less enthusiastic, which means most deals either stall or get wrapped in a maze of complicated mechanics to pad the value gap.
The Earn‑Out – The Trickery Option
- What it does: The buyer pays part of the price upfront, and the rest is earned later based on how the business performs.
- Why it matters: It lets sellers keep a safety net while giving buyers a chance to sweeten the pot if the company does well.
- The downside: The future gets messy—performance metrics, timelines, and “what if” clauses all need to be squashed into the contract.
Modelling in a World of Chaos
When rates were low, it was easy to predict a deal’s cost. Once the ball rolled into high‑rate territory, Nigel Wellings of Clifford Chance explained that folks “couldn’t even finish their spreadsheet homework.” He highlighted that buyers struggled to forecast debt costs over 3‑5 years, confusing the valuation puzzle even more.
But there’s Hope
Despite the lingering uncertainty, companies now have a clearer sense of where rates are headed. Easier inflation and lower interest rates make value gaps less painful, nudging more deals to actually close.
In a Nutshell
- Recovery in 2023 doesn’t mean perfect deals.
- Earn‑outs are the common bridge over valuation chasms.
- High rates create modelling headaches—though these are easing now.
- Every deal is a bit of a juggling act, but the future looks calmer.
Related
A shifting business landscape
Why CEOs Are Rethinking Their Playbooks in 2025
The world’s moving fast—climate change, AI buzz, and geopolitics are reshaping the boardroom. CEOs are realizing their current business models may wobble in the next decade and are turning to mergers and acquisitions (M&A) to keep pace.
Big Picture: Green, AI & Global Shifts
- Green transition – Companies are clamping down on carbon footprints or risk being left behind.
- Artificial intelligence – AI isn’t just buzz; it’s a strategic lever for efficiency and innovation.
- Geopolitical volatility – Trade wars, tariffs and sanctions prompt firms to adjust their regional footprints.
What Experts Say
Erik Hummitzsch, partner at PwC Germany, summed it up on Euronews: “If we ask CEOs, many admit their current models aren’t future‑proof. M&A becomes the tool for shedding outdated units or grabbing new capabilities.”
In practice:
- Sell off non‑core businesses that might choke later.
- Acquire competitors or complementary firms to broaden portfolios.
- Rebalance exposure—ditch hard‑to‑grow markets and double down elsewhere.
Sector Outlook: Tight Margins & Consolidation
Pitchbook analysts predict heavy consolidation where margins are razor‑thin. Two prime areas:
- Automobiles & Chemicals – Cost pressures (think US tariffs) push companies to scale for survival.
- Aerospace & Defence – Rising budgets make these sectors ripe targets for growth‑focused M&A.
IT: Still the Lone Star
From April to June, the IT sector was the only European area to report a 36.6% quarter‑on‑quarter jump in M&A activity—proof that digital infrastructure remains the hottest ticket in town.
Is Europe still scared of scale?
EU Deal‑Making: The Draghi Report, Some Peddling and a Record of Fails
Last‑year buzz about Trump loosening regulatory walls in the U.S. hastened a sense of optimism, but the true spark in Europe came from the Draghi Report that landed in Brussels with more fanfare than a London brunch.
The Report’s Mission & The Market’s Response
- What it promised: A push for consolidation across European sectors so that local giants can stand toe‑to‑toe with the world’s big‑shots. Think of it as giving Europe a chance to compete in the “giants’ club.”
- Skadden’s Lorenzo Corte’s take: “It’s all about scaling up to rival global players. Markets expect a surge of mergers, and while the early signs are there, it’s too soon to label it a trend.”
EU Commission: The Defensive Gatekeeper
The Commission often gets a bad rap for being the party‑pooper in deal‑making. A few high‑profile gates closed include:
- Siemens Mobility vs. Alstom (rail) – too much track power in one hand.
- Ryanair vs. Aer Lingus (air) – conflict of flight paths and price wars.
- Mars & Kellanova – still hanging in the balance, awaiting official green lights.
National Governments = Deal‑Bouncer
It’s not just Brussels holding the knife to the debate. For instance, the Spanish government put an eye on BBVA’s attempt to take over Sabadell—think of it as the local bouncer shouting, “We’re not letting you in!”
Clifford Chance’s Nigel Wellings on Scale
He argues that the EU can’t always scream “no” just because the deal is big. In financial services, “scale is a badge of honor,” he says, especially when you’re competing on a global scale.
Defense: The EU’s Rally Against External Pressure
The hush‑hush of defense is no longer a secret. With Trump’s demand for stronger U.S. militaries and geopolitical tensions warming up, European unions—notably Germany—have loosened debt‑brake rules so they can boost defense and infrastructure.
Bottom Line: Europe’s Deal‑Making—A Mixed Bag of “All‑In…” and “Stand‑Back”
In short, the EU’s appetite for mergers is maturing, but regulators and national governments still keep their fingers in the tea pot. The future might see more consolidation, possibly even European champions, but for now it remains a game full of drama, humor, and a touch of the unpredictable.
Moving through the headwinds
M&A Market 2024: A Buzzing Yet Balanced Beat
What’s Driving the Pulse?
Tariffs by the former president are still hanging around like a ghost, while interest rates are easing like a slow‑swing dance. The appetite for scale keeps transactions spicy. Yet all this is mixed with:
- Ukraine’s volatility— the market is still watching the chessboard move.
- Regulatory tweaks that could either tighten or loosen the net.
- ECB’s rate moves and the Fed’s decisions that set the financial tempo.
Private Equity Plays the Back‑Door
Private equity (PE) exits have been a bit of a sorry story this year. When PE investors snap a deal and hand cash back to the big whales, the buzz has been low. If PE outfits clear their backlog, the door opens wide for next year’s fireworks.
Short‑Term: Little, but Not Silent
It’s not a “we’re calling a home‑buyers market” that draws a crowd in a snap. But take the time to nurture the valuation and you’ll see buyers come knocking. Picture it like a good stew— the aroma takes time, yet a deep, hearty flavor eventually wins.
—Wellings, in the true voice of a deal‑maker: “We’re not at a heavy sell‑side process where you put something on the market and three, four bidders come forward immediately. But if you do your process properly and work hard on valuation, you’ll see deals come through.”
