Key Takeaways:

  • According to EY data, in April 2025, the value of U.S. M&A deals exceeding $100 million surged 43% from March, with deal volume up 25%. Demand for AI capabilities outweighed concerns over supply shocks and other economic uncertainties.
  • As buyer and seller expectations converge, the value of large deals among tech companies rose 31% last month. EY noted that consumer products and retail, life sciences, and power and utilities sectors all recorded triple-digit percentage growth.
  • "Large deals are re-emerging, with U.S. M&A values rising sharply as companies concentrate capital on fewer but larger transactions," said Linda Hill, EY Global and Americas Consumer and Health Leader, in a LinkedIn post. "The shift toward fewer but bigger bets marks a more deliberate phase in dealmaking."

Deep Insights:

Greg Daco, Chief Economist at EY-Parthenon, noted that dealmakers will need to weigh multiple economic pressures in the coming months. He said conflicts in the Middle East could lead to higher commodity prices, tighter financial conditions, and strained supply chains.

Daco expects U.S. economic growth to slow to 1.7% this year, down from 2.1% in 2025; rising energy costs could push core Personal Consumption Expenditures (PCE) price index up 3% this year.

He further stated that with the Federal Reserve seeking to keep long-term inflation near its 2% target, persistent price pressures could lead to only one rate cut of 25 basis points this year.

However, Daco also pointed out that the Fed could forgo rate cuts this year and instead raise the federal funds rate at its next policy adjustment.

According to the CME Group's FedWatch tool, interest rate futures traders see a 61.4% probability that the Fed will cut its key rate by no more than 50 basis points by the end of the year.

Nevertheless, EY said deal activity in the coming months "is likely to remain robust, supported by ample capital and a favorable regulatory environment, with deals focused on strategic M&A and platform growth."

EY said tech companies last month prioritized deals to build AI infrastructure and computing power, focusing investments on assets involving cloud, networking, and photonics.

"Despite ongoing macroeconomic uncertainties, strong deal activity is expected to continue," EY said.