3 FACTORS INFLUENCING M&A IN Q3 2025
HIGH INTEREST RATES AND FINANCING COSTS
Borrowing remains expensive, with high interest rates and cautious lenders raising the cost of leveraged deals. While central banks have moved toward at easing, long-term rates remain stubbornly high, keeping financing costs elevated. Private lending continues to fill the gap left by traditional lenders, but at premium pricing, forcing buyers to be more selective, contribute more equity, and get creative with deal structures. Uncertainty around the broader economy continues to cloud the outlook. Growth is slowing at different rates across regions, labor markets show conflicting signs, and ongoing geopolitical tensions weigh on business confidence. The unclear path of interest rate cuts, combined with trade uncertainty and fluctuating consumer demand, makes it challenging for dealmakers to assess future performance and agree on valuations. Regulatory and trade policy risks remain a significant headwind for M&A. Antitrust authorities in the U.S. and Europe are taking a tougher stance, extending review timelines and increasing the likelihood of deal adjustments. At the same time, shifting trade policies, tariffs, and geopolitical tensions are creating additional uncertainty for cross- border transactions. These dynamics are forcing dealmakers to price in higher execution risk, pursue more creative deal structures, and in some cases, limit activity to markets or sectors with insulation from trade uncertainty and/or clearer regulatory outlooks.
MACROECONOMIC UNCERTAINTY
REGULATORY AND TRADE POLICY RISKS
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