Morgan Stanley Research predicts decrease in M&A activity in first half of 2025 due to volatility

Morgan Stanley Research has noted a reduction in merger and acquisition (M&A) activity during the initial six months of 2025 as a result of increased market volatility. This trend indicates a shift in the overall landscape of corporate deal-making and investment strategies.

The slowed M&A activity is in part due to the uncertainty and unpredictability that has become prevalent in the market, leading to a more cautious approach from investors and businesses alike. The economic landscape has been fluctuating, impacting decision-making processes and causing hesitation in committing to large-scale transactions.

In times of heightened volatility, businesses are more inclined to hold onto their capital rather than risk it in uncertain ventures. This conservative approach to financial management is reflected in the decreased number of mergers and acquisitions taking place across various industries.

Despite the slowdown in M&A activity, some sectors have remained relatively robust in their deal-making efforts. Technology, healthcare, and consumer goods industries continue to show resilience and proactive engagement in mergers and acquisitions, indicating a level of stability and confidence within these sectors.

The pandemic has also played a significant role in shaping the current M&A landscape. The ongoing global health crisis has introduced additional layers of complexity and risk, leading many businesses to reevaluate their long-term strategies and priorities. This uncertainty has further contributed to the observed slowdown in M&A activity as companies navigate evolving challenges and market conditions.

Investors are also paying closer attention to geopolitical factors and regulatory changes that could impact potential M&A deals. Increased scrutiny and regulations in various regions have introduced new considerations for businesses looking to engage in mergers and acquisitions, adding another layer of complexity to an already intricate decision-making process.

While the first half of 2025 has seen a dip in M&A activity, experts anticipate a potential rebound in the coming months as market conditions stabilize and businesses gain more clarity on the economic outlook. The fluctuating nature of the market means that changes can occur rapidly, and businesses must remain agile and adaptable in their approach to deal-making.

In conclusion, the slowdown in M&A activity in the first half of 2025 reflects a broader trend of caution and hesitancy in the market due to increased volatility and uncertainty. While some sectors remain resilient, overall deal-making has been impacted by a combination of economic, geopolitical, and regulatory factors. As businesses continue to navigate these challenges, it is crucial for investors and decision-makers to remain vigilant and informed in their strategic approaches to mergers and acquisitions.