Part of New Deal Frontier: How evolutionary forces are reshaping M&A
With protectionism becoming more pervasive in the policy decisions of multiple countries, the global business models of many companies are being tested. Challenges to longstanding relationships are changing the dynamic between the US and countries from Asia to Europe. The Trump administration’s willingness to retreat from multilateral agreements and alliances opens the door for other nations to step up on the world stage.
The impact on M&A and other deals includes closer government reviews of cross-border investments and tariffs that have disrupted supply chains and could influence company valuations in transactions. Despite this insular stance, the advantages of establishing and maintaining connections across country lines are hard for some companies to ignore, leading them to consider new cross-border options that can help fuel growth.
President Donald Trump’s isolationist approach to trade and other issues – illustrated by several decisions in his first two years in office – has forced many US companies and investors with ties to other countries to begin adapting their growth strategies. The wait-and-see stance that some took earlier in Trump’s term has started to shift as tariffs ripple through different sectors and the overall cost impacts emerge more clearly.
This impact on the cost environment is spreading to M&A. Potential acquisition targets are at risk of lower valuations, and tariffs could extend time horizons for return on investment. Meanwhile, buyers may face a tougher challenge in capturing value after a deal. When considering an acquisitions going forward, dealmakers will need to be both flexible and diligent in considering areas of opportunity that previously were below the radar.