If dealmaking is the corporate world’s superpower, tariffs are its kryptonite. Every salvo, countermeasure, and temporary compromise in the evolving tariff landscape triggers a new wave of macroeconomic uncertainty, upending business plans.
That makes the work of M&A—valuing assets, determining cost structures, forecasting long-term cash flows, assessing supply chains, building risk models, financing, and designing integration strategies—feel like an exercise in futility.
While conditions are less than ideal for initiating deal discussions, this is no time for CEOs to stand still. Companies that see M&A and other deals as a tool for accelerating growth strategies, unlocking greater value, and strengthening their business need to research potential acquisitions and partnerships and perform due diligence now to ensure they are ready to move when the business environment finds its new footing.
By researching potential acquisitions and partnerships and performing due diligence now, companies can ensure they’re ready to move when the business environment finds its new footing.
And there are reasons to believe that moment may not be far off.
First, the appetite for dealmaking hasn’t disappeared entirely, according to the BCG M&A Sentiment Index. Deals are still happening, though more on the small- and mid-cap side. In North America, for example, deal value was up almost 50% in the first quarter of 2025 compared to the fourth quarter of 2024. But it was down 9% compared to the previous year—a sign that buyers are showing up, albeit more cautiously.
Second, while tariffs impact most sectors, the degree of disruption among them varies tremendously depending on customer and supplier exposure. We’re already seeing relative M&A optimism in health care, a sector where demand tends to be steady and therefore somewhat insulated from rising tariffs. Energy is also looking comparatively attractive, thanks to voracious and growing demand for power from data centers central to cloud migrations and AI scaling.
Third, deals made during down markets—when valuations are lower—generate higher returns on average. Our research shows that, two years on, buyers realized 9 percentage points greater relative shareholder return from transactions made in a weak economy than deals made during up markets.
Still, the world taking shape now will be different from the one before. No matter how high or low trade barriers go in future, the trust that previously existed in the global macroeconomic order is gone and uncertainty is here to stay.
The Five New M&A Archetypes—and Four Steps CEOs Should Take
When conditions do start to stabilize in this new normal of more attractive valuations but greater unknowns, we believe five archetypes are likely to dominate dealmaking:
- Jump-the-tariffs deals that help companies drive growth by establishing a local foothold in markets where trade barriers are high.
- Consolidation plays in sectors experiencing severe cost pressures and/or excess capacity.
- Resilience deals that strengthen the core business through M&A or partnerships. For example, a company with too much geopolitical exposure in its supply chain can shore it up through acquisitions or partnerships.
- Growth deals that unlock new sources of value across sectors. This is especially true for tech, where the tectonic shift toward AI and digitization continues to open new opportunities. Case in point: Google recently signed an agreement to acquire cloud security startup Wiz.
- New alliances or joint-venture formations that leverage opportunities created by bilateral and multilateral trade agreements that may take shape in the new normal.
Whichever archetype makes the most strategic sense for a company, CEOs will need to be savvier than ever about how they structure deals and be ready for whatever the global economy throws at them. These four steps can help:
- Be hyperaware of the current economic environment and the potential scenarios that could unfold. This includes understanding the full implications of tariffs for specific industries and how potential tariff-based lower valuations might provide an opportunity for an acquirer to strike a bargain.
- Understand the direct implications of tariffs on specific markets, including those where your business is currently exposed. This is vital for understanding how M&A, joint ventures, and other forms of partnership can make your business more robust and resilient. A deep, comprehensive understanding of supply chain dependencies should be de rigueur.
- Stress-test your deal logic under different scenarios. It’s no longer enough to have a rock-solid value thesis and business case for a deal—you need to stress-test your assumptions under different scenarios. You may discover, for example, that the deal stops making sense due to the location of the target company’s customer base, or that you need to build a stronger hedge against geopolitical risk through earnouts.
- Master the full range of deal options. Deals can take many forms, and it’s imperative to land on the one that makes the most sense for your company. For example, if a full acquisition is not possible, CEOs can consider taking a minority stake in a target company, setting the stage for a more gradual acquisition. This may be a particularly attractive option when eyeing a startup or when financial conditions are more constrained. Collaborative ventures also have key advantages, such as making capital go further and spreading risk.
Tariff turmoil may be dampening deal enthusiasm for the moment, but it won’t last forever. M&A bounced back six months after the pandemic struck, so it’s not unreasonable to expect it could pick up in the third or fourth quarter of this year. With an estimated $4 trillion in dry powder available in global private capital alone and about $11 trillion more in corporate cash holdings among Global S&P 1200 companies, activity will ultimately rebound.
When that happens, the CEOs who emerge as heroes of the M&A universe won’t be reactive. They’ll be ready.
