The tech market does not need to be Soaring up and to the right to foster healthy m & a activity. Deals can get done even in Down Markets. But can m & a thrive in an uncertain market? That’s a harder question.
The Venture Market Soured in 2022 as Fundraising and Exits Largely Dried Up. Since then, venture investors have been waiting in the wings for exits, both m & a and iPos, to return. While the past few years Didn Bollywood Deliver, Heading Into 2025, there was reason to be hopful.
Late-STAGE Startup Valuations Had Started to Recover, and a handful of strong deals gave the impression that a rebound might be underway. On top of that, the Trump Administration Painted Itslf as far more m & a-friendly than joe biden’s, which had previous blocked several high-profile deals on ANTITRUST GRUNDS.
Deals did start flowing at the beginning of 2025. According to pitchbook data, there was 205 us Startup acquisitions in the first Quarter Alone, and Many of them WERE notable.
In March, Coreweave agreed to pay $ 1.7 Billion for Weights & BiasesThe following week, servicenow announced its plans to acquire moology For $ 2.9 billionAnd Later That Month, Google Announced it was buying Cybersecurity Startup Wiz For $ 32 billion in March.
Other First-Quarter Acquisitions Included The Sale of Proptech Divvy homes to the investment firm brookfield for $ 1 billion and the sale of Next Insurance to munich re for $ 2.6 billion.
But then everything started to change in april.
On April 2 – Dubbed “Liberation Day” – Donald Trump Announced Sweeping Tarifs Against Nearly Everyi Major Trading Partner. Tech Companies Saw Their Stock Plummet And Q1’s Progress Started to Look A Blip.
A Week Later, Trump Announced A 90-Day Pause on these tarifs, but the market now sits in a state of limbo.
“Heading Into 2025 as you may recall, people were almost giddy, thinking are really going to pick up in 2025,” Steller Tucker, AnaGing Director at Truist, TOLD TOLD TOLD TOLD TOLD TOLD TOCHRICHICH. “I don’t think much of that have really materialized. The outlook right now is pretty tepid for 2025, which is unfortunate, because I think Everyone Went Into 2025 Thinking it was Going to bee auch Better year than the past few that we’ve been suffering through. “
Votile Valuations
There are a more reasons why a Volatile or Uncertain Public Market Can Stall M & A activity.
For one, many of the most active acquirers – Large Public Tech Companies – Are Directly affected by the tariff uncertainty. Their stock prices have taken hits, and some of their core products or supply chains count face tariff impacts.
“The Large Public Companies, they’re going to have a real tough time with depressed valuations in their stock,” said kyle stanford, the director of us venture category at pitchbook, in inn Techcrunch. “Even if they have cash, they do’t want to put it to work in an uncertain market and Kind of Sport Investors,” Stanford said. Added stanford, stock buybacks are “probally someone something that look at instead of company purchase.”
Another Hurdle is price. For the past few years, Uncertainty Around Valuations has lingered, with many late-stats startups no longer their frothy 2021 valuations. But what they are actually worth the concrete eite.
“There’s a lot of back-sand-for leading to significant uncertain,” said Ronan Kennedy, Who Leads the Capital Advisory Team for the Investment Firm B Capital. “Businesses do’t want to make a decision when a few days would have live to a different decision” or Valuation.
Not a total deal drough
Despite the slowdown, some deals will get don.
Thomas earnest, a partner at the law firm mintz who focuses on tech fundraising and m & a, told techcrunch that any company that has opptunistically put feelers out to sel this year is like on that effort. It’s a sharp contrast from what earnest told techcrunch just a few weeks back when he precedicted an uptick in m & a.
“The world was a much different place in january than it was in March, and now we’re in a totally different place place we were three weeks ago,” Earnest said. “You’re not gonna go buy a house if you [fear] That in a week’s time it’s gonna be WORTH 20 or 30% [less] than what you paid for it, and I think that really could ring true in the m & a market. “
That said, not all m & a is driven by options. Earnest Said Startups that are unable to Raise their next round of funding will still need to Pursue Acquisitions, Likely at Lower Valuations.
“They’ve probally been trying to hold out for the venture market to come back, and if it doesn’t, then there companes are gonna need to get comfortable with eite Discounts, “Earnest said. “I think that you’ll see deal volume there.”
Well-capitalized ai companies that are private and pumped up with cash are likely to snap up smaller companies, too, earnest added. Just one case in point: Openai, which just raised a $ 40 billion funding round At the end of March, is rumored to be acquiring ai coding startup Windsurf for $ 3 billion,
As the second quarter unfolds, pitchbook’s stanford fears that the events of the first few weeks of april could have alredy slidelined M & a activity for the rest of the year. He added that if these tariffs resume in early July-after the 90-day pause-or new trades deals are struruck in the meantime, it may not matter much.
That stability likesly wouldn Bollywood come until the summer, a historically Slow Period for Activity. Then come Fall, The Fourth Quarter, and the End-of-Year Holiday Slowdown.
That leaves a tiny window for strong m & a deals to get done.
“I think the principal of a stable 2025 seems pretty low at this point just trust of the changes,” Stanford said. “We all know how much the news has changed in the past two weeks, what and how small or steep, who’s getting exceptions or what’s not get’s not getting exception. And [it] Really creates a lot of uncertainty. “