The Great Divide: Why U.S. M&A is Stalling While the World Accelerates Under Trump

The U.S. M&A landscape is entering a period of bifurcation. While large deals continue to dominate headlines, smaller transactions are faltering under the weight of valuation gaps and geopolitical uncertainty. Meanwhile, global M&A activity is surging, fueled by regional megadeals and sector-specific tailwinds—particularly in Asia and Europe. This divergence is occurring against the backdrop of Donald Trump’s second administration, whose policies are reshaping the global dealmaking environment.

The U.S.: A Market of Two Halves

The U.S. M&A story in 2025 is one of contrasts. Large deals exceeding $1 billion are thriving, driven by corporate buyers leveraging highly valued stock and private equity firms under pressure to exit aging portfolios. In 2024, such deals rose by 17%, with average values climbing to $146 million. The Capital One-Discover Financial Services merger ($35.3 billion) and Synopsys-Ansys acquisition ($32.5 billion) exemplify this momentum.

But smaller deals are struggling. Transactions under $1 billion have declined by 18% year-on-year, as buyers and sellers clash over valuations. The Q1 2025 banking sector rebound—$1.61 billion in deals, up from $796 million in 2024—highlights the reliance on megadeals to drive volume.

Global Acceleration: Where Deals Are Thriving

Outside the U.S., M&A is roaring to life. Asia-Pacific saw a 24% jump in deal values in 2024, led by Japan and India. In Europe, despite regional declines, megadeals like the Allianz-Hamilton Insurance merger ($12 billion) and Couche-Tard’s pursuit of Seven & i Holdings ($39 billion) are propelling activity. The global M&A value hit $3.4 trillion in 2024, with $500 billion+ deals in AI infrastructure—such as the OpenAI-Oracle partnership—driving growth.

Drivers of the Global Surge: Trump’s Policies and Beyond

1. Deregulation and Trade Shifts: Trump’s push to reduce U.S. regulatory burdens has emboldened corporations to pursue overseas deals. Meanwhile, his tariffs and trade restrictions are spurring companies to relocate supply chains, creating opportunities for consolidation in regions like Southeast Asia.
2. AI Infrastructure Boom: The race to build data centers and renewable energy systems—$2 trillion projected globally by 2027—is fueling partnerships and M&A. Microsoft’s revival of the Three Mile Island nuclear plant and Google’s $20 billion renewable energy venture underscore this trend.
3. Geopolitical Realignment: Conflicts in Ukraine and the Middle East have boosted defense spending worldwide, while hopes for Middle East peace are accelerating deals in energy and tech.

Risks and Uncertainties

• Valuation Gaps: U.S. equities trade at a 22.87 forward P/E ratio, nearly double non-U.S. stocks (13.67), making cross-border deals challenging.
• Interest Rates: The U.S. 10-year Treasury yield near 5% is squeezing leveraged buyouts, though private credit markets ($1.9 trillion under management) offer alternatives.
• Policy Volatility: Trump’s trade policies and immigration restrictions risk disrupting sectors like manufacturing and agriculture.

Investment Implications

• Focus on Megadeals: Investors should prioritize companies involved in $5 billion+ transactions, particularly in tech, energy, and defense.
• Global Diversification: Asia and Europe offer better M&A upside than the U.S., especially in sectors like semiconductors and renewable energy.
• Avoid Smaller Plays: Until valuation gaps narrow, mid-market deals remain risky.

Conclusion: The New Global Deal Era

The U.S. M&A market is stuck in a two-speed reality: large deals thrive, but the broader market languishes. Meanwhile, global activity is booming, driven by Trump’s policies, AI infrastructure spending, and regional megadeals. The EY-Parthenon Deal Barometer forecasts a 16% rebound in private equity M&A globally in 2025, while U.S. volumes may remain constrained by high valuations and geopolitical risks.

For investors, the path forward is clear: look beyond U.S. borders and focus on megadeals and AI-driven sectors. The era of global M&A acceleration is here—and the U.S. may be missing the party.

In this divided landscape, the winners will be those who adapt to the new rules of a post-Trump world.