‘Uncertain’ 2025, M&A Deadlock Freeze $1 Trillion in PE Assets 

The word of the year on Wall Street, without a doubt, has been uncertainty. It’s the catch-all to describe everything from the fog of trade to nonstop geopolitical tensions.

The inherent uncertainty of uncertainty also makes it hard to put a price tag on its impact, but last week, accounting firm PwC offered up a number: $1 trillion. That’s the value of unsold assets that would have been returned to investors if it weren’t for private equity groups holding on to them while remaining in an uncertainty-driven holding pattern.

Auditing Uncertainty

With New Year’s fireworks in January, Wall Street was full of hope for an M&A boom driven by an incoming Trump administration with deregulation at the heart of its agenda — and lighter scrutiny from regulators when rules come into play. You know the deal: President Trump has focused on other priorities to start his second term, and the resulting market limbo has put deals on hold. According to PwC analysts, plans for initial public offerings (IPOs) of companies worth a combined $120 billion were shelved in the first three weeks of April.

The Federal Reserve’s decision to hold off on rate cuts to wait for the potential impacts of tariffs has had a resulting domino effect: a lack of cheap debt, as higher interest rates make debt more expensive. PwC noted that 30% of the $3 trillion that private equity firms have invested in roughly 30,000 companies has been held for more than five years, an unusually long period compared with the typical timetable for PE shops to turn a profit on an investment. This, they surmised, is in part because they have been less able to finance growing companies without cheap debt. “In a typical M&A cycle, $1 trillion would have already been put back into the market,” Josh Smigel, a PwC partner, said on a media call. The data, meanwhile, looks like a set of spinning wheels:

• Deal volume and value have been more or less flat year-over-year, PwC said, with roughly 4,500 deals worth a total of $567 billion through May.
• In response to PwC’s May Pulse Survey, 30% of respondents said they have paused or revisited deals because of tariff concerns, which would delay investor returns. “While nearly half (48%) of the business executives surveyed expect today’s uncertainty to last less than a year, many anticipate it could extend through the next presidential election,” reads the report.

May Change Your Mind? With the possibility that the worst of the tariff warring is over, May data provides a more optimistic scenario. The number of deals worth more than $100 million climbed 6.1% from April, according to an EY-Parthenon analysis of Dealogic data, though overall deal volume fell 6.2% from May 2024.