The End of U.S. Deal Droughts

Editor's note: Every Friday, we showcase a featured topic from our YouTube show, Altimetry Authority.

This week, we tackle themes from today's episode, which airs at 8 a.m. Eastern time.

Read on below to learn why business deals are about to ramp up...

U.S. mergers and acquisitions (M&A) hit a wall back in December...

January was also sluggish. February was even worse. By April, total deal volume had dropped more than 40%... That's one of the sharpest year-over-year declines in a decade.

Many blame President Donald Trump's murky economic policies...

He spent the first few months in office drawing up tariffs. That culminated in the April 2 "Liberation Day" announcement and marked the most sweeping tariff hikes since the Smoot-Hawley Tariff Act of 1930.

Many of those tariffs are pending, but they still cratered M&A activity. That's why the first quarter of 2025 looked like a deal desert. And then, in May, everything changed.

Today, we'll explain why M&A deals are bouncing back... and how they might create investment opportunities in specific market sectors.

Three developments are shifting the mood in company boardrooms...

First, Trump signed Executive Order 14192, titled "Unleashing Prosperity Through Deregulation," in April. It directed federal agencies to streamline M&A approvals across the health care, energy, and industrials sectors.

Second, the U.S. government is overhauling the Federal Acquisition Regulation rules, which dictate how agencies do business with private companies. It's simplifying dense language, removing non-statutory rules, and providing buying guides.

These developments are sending a clear message to corporate America... The Trump administration wants to revive business deals.

On top of that, tariffs have become more of a bargaining tool than a genuine threat. While some have been implemented (like the 20% tariff on Taiwan), others have vanished due to successful trade negotiations.

All in all, Trump's tariffs have only raised U.S. prices by a small margin. So with tariffs off the table and a move toward deregulation, cash-rich businesses sprang into action...

U.S. deal volume jumped 35% from April to June. And large, strategic acquisitions fueled that uptick... Charter Communications (CHTR) and Cox Communications, for example, announced a $35 billion merger. And software giant Salesforce (CRM) reported that it was buying AI cloud business Informatica (INFA) for $8 billion.

Bank mergers are also back on the table... Regional and midtier banks, in particular, are racing to grow. With that M&A pipeline clogged for years, there's a backlog of buyers and sellers waiting for the green light.

This means management teams are becoming more confident...

We can see this through the Management Growth Confidence Index, which is based on our Earnings Call Forensics ("ECF") work.

This proprietary auditory analysis tool uses changes of cadence, pitch, and other vocal qualities during earnings calls to identify management's sentiment.

We can sense management teams' confidence levels by looking at the ratio of "excitement" and "confidence" markers to "questionable" markers.

When the Management Growth Confidence Index rises, management teams are generally more bullish on their short-term and medium-term outlooks. Take a look at the blue trend line below...

The three-month weighted moving average (in red) has also been trending up. It's approaching early 2023 levels (roughly 15%) after hovering near decadelong lows for the past 18 months.

Simply put, management teams now understand the scope of Trump's policies. And they're more confident that tariffs won't hamper their goals.

M&A lawyers and C-suite teams are finally cutting through the red tape...

The recent deal surge shows that executives are confident about the U.S. economy and their ability to generate long-term returns.

That's good news for the broad market and a few key sectors...

Banking, professional services, and private equity all tend to thrive in strong M&A environments... due to the new capital and customers that come into play.

Companies focused on growth also do well... The Union Pacific-Norfolk Southern merger we discussed yesterday is a prime example.

After months of ambiguous government policies, it's clear that U.S. business leaders are ready to make big moves.

Regards,

Joel Litman
August 29, 2025

P.S. We'll dive deeper into the uptick in M&A activity in today's episode of Altimetry Authority. New episodes air every Tuesday and Friday at 8 a.m. Eastern time.

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