How Tariff Turmoil Is Impacting the Tech M&A Market in 2025
The tech M&A market has been a rollercoaster over the past few years, but many were hopeful that 2025 would bring stability. With late-stage startup valuations showing signs of recovery and several notable deals announced early in the year, it seemed like the industry was poised for a rebound. However, recent tariff turmoil—sparked by sweeping trade policy changes—has thrown the tech M&A market into chaos. Investors, founders, and analysts are now questioning whether the expected recovery will materialize or if this year will be another washout for mergers and acquisitions.
For those searching for clarity on what’s happening in the tech M&A landscape, here’s the bottom line: tariff uncertainty is creating volatility, stalling deals, and making both buyers and sellers hesitant to act. This disruption is particularly concerning for private equity firms, venture capitalists, and startups looking for exits through acquisition. If you’re wondering how tariffs affect M&A activity, why valuations are so unpredictable, and which sectors might still see action, keep reading—we’ve got the answers.
Why Tariffs Are Killing Momentum in Tech M&A Deals
Heading into 2025, optimism was high. High-profile acquisitions such as Google’s 2.9 billion acquisition of Moveworks signaled renewed confidence in the market. But all bets were off when sweeping tariffs against major trading partners were announced in early April.
Tech companies saw their stock prices plummet overnight, wiping out gains from Q1 and leaving acquirers wary. "The large public companies are going to have a really tough time with depressed valuations in their stock," said Kyle Stanford, director of U.S. venture capital research at PitchBook. Even cash-rich firms are hesitant to deploy capital amid political and economic instability. Instead of pursuing acquisitions, these companies are considering alternative strategies like stock buybacks to appease investors.
This hesitation creates a ripple effect across the entire ecosystem. Buyers fear overpaying for assets whose values could drop further, while sellers worry about accepting offers below inflated pre-tariff expectations. The result? A stalemate where neither side wants to budge.
Volatile Valuations: The Other Side of the Coin
One of the biggest hurdles facing the tech M&A market today is valuation uncertainty. For years, late-stage startups enjoyed sky-high valuations fueled by abundant venture funding. But as markets tightened post-2022, many of these companies found themselves stuck between inflated price tags and harsh reality checks.
Ronan Kennedy, head of B Capital’s capital advisory team, explained the challenge: “There’s a lot of back-and-forth leading to significant uncertainty. Businesses don’t want to make a decision when waiting a few days could lead to a different outcome—or valuation.” This indecision exacerbates delays in deal-making, especially for startups struggling to secure follow-on funding.
While some well-capitalized players, like OpenAI (fresh off a $40 billion funding round), may continue snapping up smaller competitors, the broader market remains cautious. Deals driven by necessity—such as distressed sales or down-round acquisitions—are likely to dominate headlines instead of opportunistic blockbusters.
Not All Hope Is Lost: Opportunities Amidst Uncertainty
Despite the gloomy outlook, not every deal is doomed. Thomas Earnest, a partner at Mintz specializing in tech fundraising and M&A, predicts that certain types of transactions will persist. Startups unable to raise new rounds of financing may opt for discounted acquisitions rather than face insolvency. Similarly, AI-focused companies flush with cash are expected to remain active buyers, targeting niche innovators to bolster their capabilities.
Consider OpenAI’s rumored $3 billion acquisition of Windsurf, an AI coding startup. Such moves highlight how even in uncertain times, strategic consolidation can thrive among well-funded leaders in emerging fields like artificial intelligence and machine learning. These sectors represent lucrative opportunities for advertisers and publishers alike, given their growing demand for cutting-edge solutions.
What Lies Ahead for the Rest of 2025
As we move deeper into Q2, experts warn that the damage inflicted by April’s tariff announcements may already be irreversible. PitchBook’s Stanford fears that unless stability returns quickly, the remainder of the year could see minimal activity. Summer traditionally slows down anyway, followed by the holiday lull in Q4, leaving only a narrow window for meaningful deals to occur.
For stakeholders hoping for a turnaround, patience and adaptability will be key. While the prospect of a stable 2025 seems unlikely at this point, savvy operators who navigate the turbulence effectively stand to benefit once conditions improve.
By addressing critical questions around tariff impacts, volatile valuations, and ongoing opportunities , this article provides actionable insights for anyone navigating the tech M&A landscape. Whether you're an investor, entrepreneur, or industry watcher, understanding these dynamics is crucial for staying competitive—and profitable—in 2025.
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