The hope for a sustained revival in tech-focused mergers and acquisitions may have been derailed by recent tariffs and market turbulence. After a prolonged downturn in venture activity beginning in 2022, which saw a marked decline in fundraising and exits, optimism had returned by the start of 2025. Late-stage startup valuations had begun inching upward, and a wave of high-profile acquisitions at the beginning of the year seemed to signal the possible return of a robust tech M&A market.
Significant transactions early in the year led observers to believe that conditions had finally improved. Notable deals included CoreWeave’s $1.7 billion acquisition of Weights&Biases, ServiceNow’s $2.9 billion purchase of Moveworks, and Google’s blockbuster $32 billion acquisition of cybersecurity firm Wiz. Additional sizable deals were Brookfield’s $1 billion acquisition of real estate startup Divvy Homes, and Munich Re purchasing Next Insurance for $2.6 billion.
Yet this renewed confidence faltered quickly. On April 2, a day labeled “Liberation Day” by the administration, former president Donald Trump announced extensive tariffs targeting most major global trading partners. Tech company stocks immediately suffered significant declines, causing markets to reassess the momentum of the first quarter. Although Trump announced a temporary 90-day pause on the tariffs soon afterward, lingering uncertainty pushed the deal-making environment into limbo.
Industry insiders have tempered their expectations considerably. Stellar Tucker, a managing director at Truist Securities, described the current outlook for the sector as “tepid,” a far cry from the hopeful atmosphere of the year’s start. She emphasized that initial optimism for a strong rebound in 2025 had failed to materialize due to this sudden instability.
The volatility created by the tariff situation has several implications. Public tech companies, historically active acquirers, face depressed stock valuations and potential disruptions to their supply chains, making them reluctant to pursue acquisitions. Kyle Stanford, director of U.S. venture capital research at PitchBook, pointed out that many public companies might opt for stock buybacks rather than risk acquisitions that could trigger investor unease.
At the same time, valuation uncertainty has risen sharply. Many late-stage startup values remain opaque, never fully recovering from the highs of 2021. Ronan Kennedy from B Capital noted the hesitation among businesses caused by day-to-day fluctuations in market conditions, further complicating deal negotiations.
Despite these pressures, some deal activity is expected to persist. Thomas Earnest, a partner specializing in tech M&A at Mintz, explained that startups struggling to secure new funding rounds may be forced toward acquisition at discounted valuations as an alternative to down rounds. Furthermore, larger companies flush with capital—including recently funded AI firms—may see these circumstances as opportunities to consolidate strength by acquiring smaller firms. OpenAI, for example, freshly capitalized with a $40 billion funding round, is reportedly considering a $3 billion buyout of AI coding company Windsurf.
Nevertheless, the overarching uncertainty appears set to cast a long shadow. Stanford warned that even if tariffs are reversed or moderated over the summer, historically low M&A activity during that period and the typical slowdown in the final months of the year leave very little room for a substantial recovery. Any resurgence in the M&A sector now heavily depends on achieving stability in the market—an outcome looking increasingly improbable in the current climate.
