## Tech M&A Market Stalled? Tariff Uncertainty Casts a Shadow Over 2025 Comeback
The anticipated resurgence of tech mergers and acquisitions (M&A) in 2025 may be in jeopardy, as newly imposed tariffs inject uncertainty into the market, potentially chilling deal flow. While M&A activity doesn’t require a booming market to thrive, it struggles to flourish in an environment of unpredictability.
After a challenging 2022 that saw venture funding and exits plummet, investors entered 2025 with renewed hope. Late-stage startup valuations began to recover, and several significant deals hinted at a possible rebound. Furthermore, the perception that the Trump administration would be more amenable to M&A compared to the antitrust scrutiny under Joe Biden fueled optimism.
Early 2025 saw a flurry of dealmaking. PitchBook data revealed 205 U.S. startup acquisitions in the first quarter, with some notable transactions making headlines. These included:
* CoreWeave’s $1.7 billion acquisition of AI developer platform Weights & Biases.
* ServiceNow’s planned acquisition of Moveworks for $2.9 billion.
* Google’s acquisition of cybersecurity startup Wiz for a staggering $32 billion.
* Brookfield’s purchase of proptech company Divvy Homes for $1 billion.
* Munich Re’s acquisition of Next Insurance for $2.6 billion.
However, the landscape shifted dramatically in April. The announcement of sweeping tariffs on nearly every major trading partner on April 2nd, dubbed “Liberation Day” by some, sent shockwaves through the tech sector. Stock prices plummeted, erasing the gains made in the first quarter. Although a 90-day pause on the tariffs was announced a week later, the market remains in a state of flux.
“Heading into 2025 as you may recall, people were almost giddy, thinking things are really going to pick up in 2025,” Stellar Tucker, a managing director at Truist Securities, told TechCrunch. “I don’t think much of that has really materialized. The outlook right now is pretty tepid for 2025.”
Several factors contribute to the chilling effect of market volatility on M&A activity. Publicly traded tech giants, often the most active acquirers, are directly impacted by tariff uncertainty. Depressed stock valuations and potential disruptions to supply chains make them hesitant to deploy capital.
“The large public companies, they’re going to have a really tough time with depressed valuations in their stock,” said Kyle Stanford, the director of U.S. venture capital research at PitchBook. “Even if they have cash, they don’t want to put it to work in an uncertain market and kind of spook investors.” Stock buybacks, Stanford suggests, may become a more attractive alternative to acquisitions.
Furthermore, disagreement over valuations remains a major obstacle. While many late-stage startups are no longer valued at their 2021 peaks, determining their true worth in the current market remains a challenge. This leads to protracted negotiations and uncertainty, discouraging potential buyers.
“There’s a lot of back-and-forth leading to significant uncertainty,” said Ronan Kennedy, who leads the capital advisory team for the investment firm B Capital. “Businesses don’t want to make a decision when waiting a few days could have led to a different decision” or valuation.
Despite the slowdown, not all dealmaking will cease. Thomas Earnest, a partner at the law firm Mintz, notes that companies that were exploring potential sales earlier in the year are likely to pause their efforts. However, startups facing funding challenges will still need to pursue acquisitions, potentially at lower valuations.
“They’ve probably been trying to hold out for the venture market to come back, and if it doesn’t, then those companies are gonna need to get comfortable with either down rounds or acquisitions at discounts,” Earnest said.
Well-funded private AI companies, like OpenAI, may also acquire smaller firms to expand their capabilities. For example, OpenAI, fresh off a $40 billion funding round, is rumored to be in talks to acquire AI coding startup Windsurf for $3 billion.
As the second quarter progresses, the lingering effects of early April’s tariff announcement could dampen M&A activity for the remainder of 2025. And with a potential resumption of tariffs in July and the slow summer months on the horizon, the window for robust dealmaking is shrinking.
“I think the prospect of a stable 2025 seems pretty low at this point just because of the changes,” Stanford concluded. The uncertainty surrounding trade policies creates an environment where companies are hesitant to make significant investment decisions.