The state of the technology mergers and acquisitions (M&A) market has never been worse. Uncertainty has dominated the conversation as a result of numerous tariff announcements by the Trump administration. Following the announcement of tariffs against major trading partners on April 2, 2025, many companies have decided to sideline their acquisition efforts for the remainder of the year. The announcement began a 90-day clock for the program to be on hold. At this point, the market is in a wait and see mode, leading to uncertainty for potential acquirers.
Even as this situation develops, businesses are still struggling with the volatility of what future tariffs might look like and their effect on valuations. With all the continued uncertainty, they’ve taken a very conservative approach. This is particularly the case for big public tech firms whose business models are directly affected by rapidly shifting international commerce regulations. As a result, many firms are deciding to sit on the sidelines in their M&A decisions. They know that a handful of days delay can completely shift the valuation landscape.
The Impact of Tariff Announcements
These new tariff announcements continue to have a chilling effect across the entire tech sector. It’s a challenge when the fiscal impacts are unknown for companies to make firm commitments and acquisitions. The specter of tariffs adds a new layer of concern into valuation calculations, driving most firms to halt their buying initiatives indefinitely.
This uncertainty is affecting the smaller market participants as well, which is affecting the entire market. The vast majority of these companies are nonetheless actively pursuing other means, such as stock buybacks, to shore up financial returns. They are waiting for more clarity on tariffs and their broader economic impacts. This hesitation is a result of wanting to escape making the wrong choice in a world that seems to change daily.
Our housing market analysts emphasize that a minority of companies—with the strongest cash reserves—are capable of making acquisitions. The general sentiment on the market is very cautious. Looking towards M&A activity in 2025, the outlook seems “pretty tepid,” as companies continue to work their way through the haze created by tariff-related ambiguity. Executives are understandably skittish with all of the other factors in flux. They believe it’s better to let the dust settle before they invest taxpayer dollars in large fixed–route plus facilities.
The Role of Antitrust Considerations
Beyond macro tariff uncertainty, the Biden administration’s rising concern with antitrust issues has made the M&A climate even more problematic. Companies are now burdened with that additional layer of complexity. They should be looking carefully at how any potential acquisitions fit with the changing regulatory environment. This increased pressure has caused many companies to shift how they approach the acquisition process.
The cocktail of tariff worries and antitrust scrutiny have combined to produce a toxic climate in which M&A activity is paralyzed. Executives can no longer count on regulatory risk to be a deterrent for transactions likely to raise regulatory eyebrows and subsequent inappropriate regulatory delay or rejection. In response, firms have become more risk-averse in their acquisition efforts, aiming for less controversial pastures.
Even with these headwinds, there are still pockets of robust activity within the tech industry. Private Artificial Intelligence firms with huge war chests are poised to pick up the pieces. Most importantly, they can make strategic acquisitions of smaller companies that are failing under today’s market pressures. Agile incumbents are poised to capitalize on the opportunity. They will use their capital firepower to buy up the most promising technologies and talent, completely changing the competitive landscape.
A Decline in Startup Acquisitions
The venture capital market has been stuck in a rut lately. Having faced tremendous losses in 2022, fundraising and exit activity has all but evaporated. During the first quarter of 2025, only 205 U.S. startup acquisitions occurred. That would be a deep drop from the comparatively halcyon years that came before it.
It was during this whirlwind few weeks that CoreWeave gained attention for agreeing to acquire Weights & Biases for $1.7 billion. This acquisition demonstrates that while deals can still be made, they are indeed a rarity. The dramatic drop in startup acquisitions is a clear indicator of the prevailing tide of wariness flowing throughout the tech world.
As firms reconsider their development pipelines given these headwinds, most are taking a wait-and-see approach. This approach provides businesses with flexibility as they test the waters on promising opportunities without stretching their resources too thin. This reluctance to participate in M&A activity is a microcosm of the mentalities affecting economic conditions and market volatility at large.
Leave a Reply