Wall Street Unlocked: Trump's Presidency and the M&A Boom

As the dust settles on the 2024 U.S. Presidential election, one thing is clear: Wall Street is expecting a surge in merger and acquisition (M&A) activity under a second Trump administration. With Republicans maintaining control of the Senate and Trump's victory in the presidential race, dealmakers and corporate leaders are anticipating a loosening of regulations and a more favorable environment for deal-making.



Trump's first term saw a tough stance on antitrust policy, challenging notable transactions like AT&T's acquisition of Time Warner and Broadcom's proposed takeover of Qualcomm. However, his administration is expected to roll back regulations, fostering a more conducive environment for deal-making. This is particularly true in the financial and pharmaceutical sectors, which have been impacted by stricter antitrust enforcement under the Biden administration.



Trump's proposed tax policies, including corporate tax cuts, could also stimulate investment and economic activity, further boosting M&A activity. Additionally, his appointment of new regulators and officials, particularly at the Securities and Exchange Commission (SEC) and Federal Trade Commission (FTC), could significantly impact the M&A environment. Trump's promise to replace SEC Chair Gary Gensler, an outspoken critic of crypto, suggests a more favorable regulatory climate for digital assets, which could boost deal activity in the crypto sector.

However, it's not all sunshine for dealmakers. Trump's trade policies, including tariffs and potential renegotiation of trade agreements, could impact M&A activity in specific sectors. For instance, a 10% tariff on all U.S. imports and 60% on Chinese-made products (proposed by Trump) would hike consumer prices, reducing spending power by $46-$78 billion annually (NRF study). This could slow consumer goods and retail M&A. Conversely, sectors like defense and aerospace might see increased activity due to geopolitical tensions and potential government spending boosts.



Moreover, Trump's stance on drug pricing and intellectual property could shape pharmaceutical industry deal-making. As a proponent of lower drug prices, Trump may pressure pharmaceutical companies to reduce prices or face regulatory consequences, potentially limiting their ability to engage in mergers and acquisitions (M&A). However, his administration could also encourage consolidation to increase bargaining power with foreign drug manufacturers, as seen in his first term.

In conclusion, a Trump presidency is expected to bring significant changes to the M&A landscape, with potential booms in certain sectors and headwinds in others. While deregulation and tax cuts could stimulate deal activity, trade policies and regulatory pressures could create uncertainty and slow down M&A. As always, investors and dealmakers should stay informed and adapt to the ever-changing political and economic climate.