Wall Street banked on a flurry of deals under Trump in 2025. It wasn't that simple

Deal Activity Overview - The total deal value for 2025 reached approximately $2.4 trillion, a significant increase from about $1.83 trillion in 2024, driven by high-value agreements in corporate M&A and private equity buyouts [1] - Middle-market deal volume was low in 2025, with large M&A transactions inflating overall statistics, marking a decade-high level of megadeals, which were double the number from the previous year [2] Historical Context - 2021 remains the peak year for U.S. deal activity, with 19,666 deals valued at roughly $5.55 trillion, influenced by low interest rates at that time [3] Market Conditions - The sluggishness in dealmaking during the first half of 2025 was attributed to uncertainty from Trump's tariff announcements, which created a challenging environment for executives [4][6] - The consumer sector saw a 17% decline in deal value during the first three quarters of 2025 compared to the same period in 2024, while industrials, energy, and healthcare sectors experienced growth in transaction values [8] Sector-Specific Insights - In the retail space, there were 227 U.S. deals recorded through mid-December 2025, down from 296 in the previous year, but the total valuation exceeded $40 billion, compared to approximately $28.4 billion in 2024 [9] - The automotive industry faced a 19.9% decline in deal volume year-over-year, reflecting broader challenges in the industrial manufacturing sector [17] Regulatory Environment - The Trump administration's policies have influenced deal approvals, with companies like Verizon altering their diversity policies to facilitate regulatory approvals for significant acquisitions [20][21] - The merger of Paramount Skydance was approved after the company agreed to eliminate DEI initiatives, showcasing the regulatory landscape's impact on deal-making [21] Future Outlook - The second half of 2025 saw a resurgence in deal activity, particularly in the banking sector, which experienced an 88% increase in announced deals, with total transaction sizes nearly quadrupling to $39 billion [29] - There is optimism for continued deal-making activity in 2026, especially among regional banks, driven by activist investors and a more favorable regulatory environment [30][31]