CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.

CFO Brew

Alex Zank

cfobrew.com

Companies have contended with a whole lot of uncertainty this year. 

 of finance leaders found that more than 60% said macroeconomic trends significantly impacted their planning in the first six months of 2025.

A consequence of all this volatility is that it may become more difficult to execute on transactions.

 that “slowing US growth, elevated interest rates and continued policy uncertainty” are putting pressure on dealmaking. These macro factors will “continue to contribute to a more cautious investment environment.” PwC noted in a midyear report that after a strong start, the IPO market cooled off this spring “amid macro headwinds.”

Fear not. It is still possible to execute that acquisition or capital raise amid volatility; it just requires an organization to think ahead and be ready to execute when the right moment arrives, according to experts.

“As someone who spends a lot of time in the IPO market, windows open quickly [and] they close quickly,” Mike Bellin, US IPO leader at PwC, said at Workiva’s Amplify conference in September. “And if you’re not ready here, you’re going to miss that window, or you’re going to lose a lot on the valuation side of the house.”

 Volatility has shifted dealmaking strategies this year, according to Bellin, who said he’s seen more earnouts—when buyers pay part of the purchase price after the acquired company meets certain performance expectations—and more “joint ventures being considered rather than full M&A, just to de-risk a process a little bit.”

Healthcare company McKesson has focused on optimizing its portfolio recently, Sarah Ahmad Ali, its chief counsel of securities and corporate finance, explained to Amplify attendees. The company sees the biggest growth opportunities in its oncology and biopharma segments, and has looked to invest further there by spinning off its medical-surgical business.

“The timeline for a spin-off, especially in this market and healthcare, has been down recently,” she said. “We don’t have great visibility into when the IPO market will be ready, but on our side it’s a matter of getting that business ready to be independent, to be spin-off ready, on our own timeline, so whenever the market does open up, we can have it at that point.”

Construction firm Limbach Holdings has remained busy doing deals through this turbulent economy. In July, Limbach announced the $66.1 million acquisition of Pioneer Power, which it financed through cash and a “recently expanded revolving credit facility,” according to a news release.

Limbach CFO Jayme Brooks told CFO Brew that, by design, it works in “critical markets” such as healthcare and life sciences. This shields Limbach a bit from macroeconomic volatility because “there’s a critical need for [clients’] systems to be working.” Limbach looks for a similar client base in the companies it’s targeting for acquisition.

“We’ve got a big pipeline of possibilities; it’s just vetting through that,” she said. “We really need to find the right cultural fit, that right mix of customers, the right mix of industry.”

Snack company Mondelēz International, for its part, has been divesting parts of its company that don’t fit with its core products—think “chocolate, cookies, and crackers,” Mark Dunham said during the Amplify panel. At the time, he was the company’s director and senior counsel of corporate governance and compliance, though he recently announced on LinkedIn that he’s now senior director and senior counsel of securities and governance at Shoals Technologies Group.

Because windows to execute a deal are sometimes short, everyone involved in making deals happen needs to be on the same page, Dunham told Amplify attendees.

“What I find the biggest challenge is that no one is ready when treasury is ready, and then treasury gets upset, and then they talk to the CFO who’s waiting on the money,” he said. “And then, of course, you don’t want the CFO to come downstairs…and say, ‘where’s the money?’”

Dunham said he avoided this scenario by bringing together all functions that participate in deals—including “treasury, tax, accounting, compliance, outside counsel,” and others—to lay out expectations of what things need to happen by certain points along a deal timeline.

“For me, it’s really been about getting everybody in a state of rapid readiness,” he said. “When we’re ready to go, we’re ready to go.”

Teal background; a red arrow and white arrow coming together, going upwards

Dealmaking, in this economy? Certainly.

While deal timing is uncertain, orgs should be ready to execute at a moment’s notice, experts said.

The financial services sector’s second quarter of dealmaking shows that strategic M&A is alive and well, despite a slump in deals overall.

Deal volume for financial services was down in Q2 nearly 3% from the previous quarter (and down 7.6% YoY) in the sector that includes banks, investment groups, and insurance companies, but deal value was up 22% from Q1 (and nearly 51% YoY) thanks to a few big-ticket deals, according to a recent KPMG 

KPMG warned regional banks must “scale or surrender.”

 Megadeals such as Global Payments’ purchase of Worldpay for $24.3 billion and the Columbia Banking x Pacific Premier merger drove banking M&A value through the roof, although the total number of deals was down. The Q2 M&A environment held an important lesson for regional banks: They “face a strategic crossroads as consolidation becomes imperative,” the firm noted.

Insurance firms pushed for specialization and consolidation.

 Insurance brokerage dealmaking dominated financial services M&A activity in the quarter. Strategic acquisitions “significantly outweigh[ed] financial buyer activity, indicating consolidation driven primarily by acquirers seeking synergies and market expansion rather than financial engineering,” according to the report.

In all, insurance-sector deal volume was down from Q1 and YoY, but total deal value shot up (nearly doubling from Q2 2024). While brokers continued their consolidation spree, insurance carriers set their sights on specialty products.

KPMG noted elevated activity “in specialty deals and smaller regional distribution transactions,” which “underscore the sector's focus on specialization and scale, enhancing market positions and driving premium valuations in strategic acquisitions.”

Capital markets seized on strategic opportunities.

 Deal volume and value totals were down from Q1 in the capital markets space. The deals that did get done came from “sustained strategic interest in RIAs, crypto platforms, and alternative investment firms,” which showed a continued push toward “diversification and client acquisition,” the report said.

Financial services M&A landscape shows strategic dealmaking alive and well

Capital markets showed interest in crypto, while regional banks need to “scale or surrender.”

Natasha Piñon

Personally, our foolish prediction for 2025 was that Rihanna would finally release new music, and, well, 

 movie doesn’t count. So, we’re 0–1 predictions-wise this year.

 a very different 2025 than we’ve had so far.

“If we were to look back 12 months and six months, I think we all were looking for 2025 to be a banner year for M&A,” Kevin Desai, US deals platform leader at PwC, said at a talk with reporters tied to the firm’s 2025 midyear deals outlook. “I think with the new incoming administration, what was thought to be a more business-friendly environment with interest rates coming into clarity, with inflation coming down, it was poised to be a good year.”

, with deal volume (4,535) and value ($567 billion) remaining flat compared to 2024, per PwC’s midyear outlook. That’s actually something of an accomplishment, Desai pointed out, “just given the level of new uncertainty.” Still, not the year some may have expected.

In May, a PwC survey found that about 30% of executives responding had paused or planned to revisit deals because of tariffs. “When you look at it across sectors, it’s interesting that it’s affecting all sectors relatively equally, even financial services, telecom,” Desai noted.

It goes to show just how destabilizing tariff policies have been on executives’ decision-making processes lately (though you already knew that).

“From a boots-on-the-ground perspective, the C-suite is being held to the fire by boards on two questions: What are the impacts [of tariffs], and what are our options?” Mark Truchan, a partner in PwC’s customs and international trade practice, said at the same event. “And in many cases, the C-suite is asking for daily briefings on these topics, and many organizations never had the tariff infrastructure to be able to respond.”

But even though tariffs clearly rattled the M&A market in the first half of the year, there are some bright spots, as well as signs of a potential rebound ahead. In May, for instance, Desai noted, there were more mega deals (or deals of $5 billion in value or more) than in the previous three years.

When asked about pursuing new mergers and acquisitions, 51% of executives PwC polled in May said they have initial steps underway, while 20% were already beyond initial steps. The firm noted that now, “the question is exactly how long it will take to reach a policy equilibrium in which C-suite leaders are comfortable deploying capital on major new investments.”

And for all the political uncertainty of the first six months of the year, it’s far from an all-hope-is-lost moment.

“We believe that as the policy umbrella gets unveiled a little bit and we think about what's going to happen with the budget package and what's going to happen with trade policy, there is a tremendous amount of pent-up demand, not necessarily to do deals for deals' sake, but there are true market factors that are driving companies that need to rethink the positioning of their business, and we're hopeful that the rest of 2025 will start to look different as the policy picture comes into clarity,” Desai said.

The M&A market is yet another tariff casualty—but there’s hope 

Deal volume and value have both been flat for the year, but that’s actually something of an accomplishment, PwC deals expert said. 

Courtney Vien

An even larger deal between two accounting firms may be on the horizon. The Wall Street Journal reports that Baker Tilly, the 11th-largest accounting firm in the US, and Moss Adams, the 12th-largest, are 

 to complete a merger. If the deal goes through, the combined entity would be the 6th-largest accounting firm in the US, with annual revenues of more than $3 billion.

 of taking on private equity investment, 

 in itself to PE funds Hellman & Friedman and Valeas Capital Partners. Since then, it’s been on an acquisition spree, scooping up at least six smaller firms. It has plans to increase its US revenue as much as threefold by 2030, Jere Shawver, the CEO of its audit practice, said last year.

Broker Allan Koltin, who has worked on many accounting firm deals involving private equity, praised the potential merger, 

 CPA Practice Advisor that “both firms will bring over their unique areas of industry specialization and service line expertise, which should provide robust organic growth opportunities to the combined firm.”

The deal would make the combined firm the largest non-Big Four firm in the West, Koltin said. Both firms have a sizeable footprint in western states: Moss Adams has 15 offices in California, eight in Washington state, and seven in Arizona, Colorado, Oregon, New Mexico, and Utah, while Baker Tilly has nine offices in California and five in Arizona, Colorado, and Washington state.

In an email to staff, CPA Practice Advisor reported, Moss Adams CEO Eric Miles neither confirmed nor denied that a deal was in the works, calling the Wall Street Journal article the “result of…mounting rumors and speculation.” Another source, however, told CPA Practice Advisor the deal was likely to be announced between June 1 and July 1.

Baker Tilly in talks to merge with Moss Adams

The megamerger would create the country’s sixth-largest accounting firm. 

 this year? Well, so far it’s been “more lukewarm,” KPMG experts said of the first quarter of dealmaking, in a 

M&A activity through March 10 totaled $376 billion in value, putting the first quarter (well, most of it) at a 7% decline from Q4 2024 and making it the lowest quarter since Q3 2023, which came in at $349 billion, according to the Big Four accounting firm.

“The excitement and positive momentum observed in the M&A market at the start of the year has morphed into something more lukewarm,” as some firms held off on deals due to tariff uncertainty, Carole Streicher, head of deal advisory and strategy at KPMG US, said in the report. “However, there is still optimism that this year will be better than last, as there continues to be pent up demand for deals, with companies still looking to divest slow-growing assets and make acquisitions that will promote growth accretive to their bottom line.”

US private equity deals were down by an even greater rate. According to the report, Q1 PE acquisitions totaled $145 billion, a decrease of 19% from the last three months of 2024. It was also “the slowest quarter” for PE deals since Q1 last year, KPMG added.

It was a mixed bag for companies going public. There were 59 IPOs in Q1, down from 76 in Q4. US-listed IPOs raised $9.2 billion in the quarter, an increase of 7% from Q4, “but still far below the high of $133 [billion] seen in Q1 2021.”

Again, KPMG pointed to tariffs as a culprit.

“The year started well for the IPO market, but we saw a significant drop in activity in March as the impact of the tariffs and the market correction closed the IPO window for many,” Shari Mager, US capital markets readiness leader at KPMG, said. “We are still optimistic for the IPO market for the rest of the year, as we know there is a full pipeline of companies wanting to go public. We’ll need to see some more clarity over the tariffs and some calm in the markets for another IPO window to open up before the summer.”

Experts who recently spoke with CFO Brew also cited economic uncertainty and minimal movement on interest rates as other 

M&A activity declined in the first quarter

 Deal volume and total value both fell from the previous quarter, KPMG finds.

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.

 Experts said tariffs add a new wrinkle to dealmaking, potentially causing some acquiring companies to tap the brakes.

“We went into this administration expecting deals to spike because of deregulation, but there’s the tariff uncertainty,” Al Paul, EY Americas operating model effectiveness leader, told us. “So everyone’s got to hold onto cash, because cash is king. Cash is what’s used primarily in M&A, especially when you’re buying somebody smaller.”

And while the executive branch has made quick work of dismantling entire agencies, one decision caught some off guard. The FTC and DOJ announced last month that they would 

 Biden-era guidelines for reviewing mergers.

In a memo to staff, FTC Chairman Andrew Ferguson wrote that the decision follows 30 years of precedent, and that if “merger guidelines change with every new administration, they will become largely worthless to businesses and the courts.” Still, the decision surprised many on Wall Street, CNBC 

Michelle Mantine, partner at Reed Smith and leader of the law firm’s antitrust and competition team, told us clients were concerned following the FTC announcement whether this meant more of the same level of “aggressive antitrust enforcement” seen under Biden. To those concerns, she said Ferguson pointed out that the Biden guidelines are “not that far off or very different from prior guidelines; a lot of them are relatively the same and based on case law.”

Mantine said she hopes federal regulators will apply the guidelines “to the facts in a thoughtful way that reflects substantive antitrust analyses.” She added that she wouldn’t be surprised if the FTC eventually revises the guidelines.

“But I do think that the enforcers right now are more focused on the application than they are with the actual guidelines, it seems, based on the commentary,” she said. “So we really need to let time take its course and see how they play out when they’re actually applied to the given facts and circumstances.”

 Just as organizations may face strong headwinds in M&A, they may also be under tremendous pressure to move ahead on a deal anyway.

, McKinsey called private equity “one of the most compelling forces that could boost M&A in 2025.” PE firms are sitting on an estimated $2+ trillion in dry powder, which refers to capital that’s been committed but is unallocated. The average exit hold time reached 8.5 years in 2024, which the firm wrote is “an all-time high.”

“It’s like a tempest in a teapot over there,” Henry said, adding that further movement of interest rates by a half-point to a point could “suddenly change deal model values.”

Now five years removed from the onset of the Covid-19 pandemic, PE firms also now have “true representative financials to be able to understand the trajectory of a business, as opposed to looking at the disrupted times during the Covid era,” Henry said, “which makes it easier to understand the true trajectory of a business and to ultimately value those assets.”

“It is a busy time in these [PE] firms and a harbinger, I think, of things to come,” he said.

Mantine said organizations should bring in antitrust lawyers early in the dealmaking process so they can get “in front of any sort of substantive antitrust issues.” They should have a clear picture of the antitrust risk during the negotiation stage, so they can determine if they’re comfortable with the level of risk and perhaps even share or transfer the risk between parties.

The headwinds that could slow down M&A this year

Dealmaking, in this economy?!

It’s not often you can say things will remain status quo in President Trump’s second term, but this is one of them.

Both FTC Chairman Andrew Ferguson and Omeed Assefi, acting assistant attorney general in the DOJ’s antitrust division, revealed the two enforcement agencies will keep the Biden-era guidelines for reviewing mergers. The two agencies 

 the set of guidelines at the end of 2023.

In a memo to FTC staff, Ferguson noted that merger guidelines work best for all stakeholders when both the FTC and DOJ are “singing from the same song sheet.” In the DOJ memo, Assefi said he “wholeheartedly agree[s]” that the guidelines work best when there is stability. He said the antitrust division “will continue to use the 2023 merger guidelines until further notice.”

Ferguson pointed to more than 30 years of history of new administrations maintaining guidelines from their predecessors. For instance, President Bill Clinton kept President George H.W. Bush’s 1992 guidelines when he took over the Oval Office, and President George W. Bush did the same with Clinton’s 1997 guideline updates.

“I think the clear lesson of history is that we should prize stability and disfavor wholesale rescission,” Ferguson wrote, adding that if “merger guidelines change with every new administration, they will become largely worthless to businesses and the courts.”

Ferguson also noted that keeping the revised guidelines is good for FTC and DOJ.

“The wholesale rescission and reworking of guidelines is time consuming and expensive,” he wrote. “We should undertake this process sparingly. We have limited resources to patrol the beat and constant turnover undermines agency credibility.”

 that the decision is “a blow to Wall Street,” which has largely anticipated a deregulatory attitude from Trump 2.0 that would in turn 

M&A