The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Jeffrey Goldfarb

NEW YORK, June 30 (Reuters Breakingviews) - Main Street’s vexing vibes have drifted onto Wall Street. Just as shoppers keep spending despite pessimistic economic perceptions, there’s a similar disconnect in high finance. The mid-year deal digest from LSEG indicates a 30% annual uplift in worldwide M&A activity, to $1.9 trillion, contravening a general malaise.

The mismatch between perception and reality is understandable. For one thing, Donald Trump’s return to the White House initially stoked animal spirits across boardrooms, where executives gleefully anticipated that tax cuts and regulatory rollbacks would make it easier to deploy capital. Representative of the high expectations was a November 2024 projection by Morgan Stanley strategists that conditions were ripe for a 50% increase in merger volume in 2025.

Instead, tumultuous U.S. tariffs and Middle East war played havoc with stock valuations and financial forecasting. CEOs surveyed last month by the Conference Board research outfit turned glummer more severely than they have in a half century. The muted 13% growth in first-quarter M&A reflected the downbeat sentiment. Private equity firms also have been struggling to offload aging portfolio companies, but they managed to get busier with a 25% increase in first-half buyouts.

Fortunately for investment bankers, intrepid bosses such as Alphabet’s GOOGL.O Sundar Pinchai, Toyota Motor’s 7203.T Akio Toyoda and Charter Communications’ CHTR.O Chris Winfrey helped lead an outbreak of mega-mergers. The 64 deals worth at least $5 billion apiece totaled some $830 billion, or 44% of the volume through the end of June, the highest rate since 2019. Moelis MC.N Co-President Navid Mahmoodzadegan cautioned a few weeks ago that trade ructions could make some corporate consolidation harder for a while, but also said his advisory shop’s pipeline is “as high as pretty much it’s ever been.”

History suggests that overreliance on chunky transactions is a mixed blessing. Twice since 2001, $5 billion-plus deals have accounted for more than 40% of the tally through June in back-to-back years. When the proportion surpassed that level in the first halves of 2007, 2015 and 2019, however, it immediately preceded a broader slump. An 11% drop in the 2025 deal count to below 23,000, the lowest figure in five years, also speaks to a more fragile merger market that's propped up by just a few big transactions. Moreover, the ratio of M&A to market capitalization, a benchmark that advisers watch closely, is only slowly inching back up to its 15-year average. It’s enough to make any dealmaker feel all the feels.

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CONTEXT NEWS

Worldwide merger activity increased 30% in the first half of 2025, to about $1.9 trillion, from a year earlier, according to preliminary data from LSEG through June 24. The number of deals declined 11%.

Among the biggest transactions during the stretch was Charter Communications buying rival U.S. cable operator Cox Communications for $35 billion and Alphabet agreeing to acquire cybersecurity software developer Wiz for $32 billion.

Goldman Sachs was the leading M&A adviser in the first half, followed by Morgan Stanley, JPMorgan, Citi and Barclays. Wells Fargo also jumped six spots from last year’s first half to rank ninth place on the league tables.

(Editing by Liam Proud; Production by Pranav Kiran)

((For previous columns by the author, Reuters customers can click on GOLDFARB/jeffrey.goldfarb@thomsonreuters.com))