This was supposed to (and could still be) the year that M&A returns in a big way.

But with a regulatory surprise (more on that below) and a trade war heating up, and some newfound economic anxiety to boot, the dealmaking calculus has shifted. Here’s what experts told us about the building M&A headwinds and how the rest of the year might pan out.

Jake Henry, co-leader of McKinsey’s M&A practice, told CFO Brew that while he’s ultimately bullish on the M&A market this year, “the uncertainties that have constrained M&A still haven’t been entirely released.”

Potential M&A dampeners include minimal change in interest rates, the Trump administration enacting tariffs on trading partners, and regulatory constraints, he said. But there’s still an overall deregulatory attitude from President Donald Trump. Along with that is significant pent-up demand to do deals among private equity firms.

“Eventually the tailwinds will prevail, but I think it’ll probably be midyear or even toward the second half before you actually see [the M&A market] meaningfully shift,” Henry said.

Click here for more on the new M&A landscape.—AZ

Retail giants like Walmart and Target have warned of a drop in consumer confidence lately. And now, somewhat-less-than-giant mall favorites are also sounding the alarm.

American Eagle, Dick’s Sporting Goods, Kohl’s, and Ulta all offered muted or downbeat guidance for FY 2025, with some forecasting single-digit sales and revenue drops. Executives said tariffs, inflation, and federal layoffs have left consumers spooked.

“Fear of the unknown”: American Eagle Outfitters, for instance, had record revenue of $5.3 billion last year and saw 4% same-store sales growth. But its Q4 sales dropped a bit from Q4 2023, and sales have been slow heading into 2025, CEO Jay Schottenstein said.

Consumers are cautious right now due to a “fear of the unknown. Not just tariffs, not just inflation,” he said. “You see the government cutting people off. They don’t know how that’s going to affect them. They see programs being cut; they don’t know how that’s going to affect them.”

“Against this backdrop,” Schottenstein said, “we currently expect full year revenue and operating income to be down relative to last year.” In its guidance for 2025, the clothing chain predicts a low-single-digit revenue decline.

For more on how retailers are becoming more pessimistic, click here.—CV

During a quarterly earnings call on March 4, Target reported that quarterly net sales declined 3.1%, while in February, when only the first three days were included in the quarter, CEO Brian Cornell stated that there was a “sales decline,” without being specific.

Then Target executives all but led a singalong of “Peter Cottontail” on the call, mentioning Easter five times, specifically the windfall the company expected leading up to the holiday.

“We had record sales [for] Valentine’s Day,” Rick Gomez, Target’s chief commercial officer, said during the call. “That bodes really well for Easter. So we are encouraged by that and looking forward to Easter.”

What may not bode so well, however, is that the week of March 3 (which included Ash Wednesday, the start of Lent) marked the beginning of a national Lenten boycott of Target, which goes through Easter.

Spearheaded by Black clergy, the protest highlights that Target, after years of championing racial justice and social justice, rolled back its diversity, equity, and inclusion (DEI) program in January. The protest had a goal of signing up 100,000 consumers to participate; more than 150,000 had signed up when this story was published.

Keep reading Retail Brew’s story on the potential economic fallout of a Target boycott here.—AAN