The high-tech market doesn’t need to surge to promote healthy M&A activities. Transactions can also be achieved in down markets. But can M&As thrive in uncertain markets? That’s a difficult question.
The venture market became sour in 2022 as fundraising and exits were dwindled significantly. Since then, venture investors have been waiting on the wings to bring back both M&A and IPO exits. The past few years have not been headed for 2025, but there was a reason to hope.
The valuation of late-stage startups began to recover, with a small number of strong deals giving the impression that rebounds could be ongoing. Additionally, the Trump administration portrayed it as far M&A-friendly than Joe Biden, who previously blocked some well-known deals on antitrust basis.
According to Pitchbook data, trading began to flow in early 2025. There were 205 US startup acquisitions in the first quarter alone, many of which were noteworthy.
In March, CoreWeave agreed to pay $1.7 billion for weights and bias. The following week, ServiceNow announced plans to acquire MoveWorks for $2.9 billion. And later that month, Google announced it would buy cybersecurity startup Wiz for $32 billion.
Other first-quarter acquisitions included a $1 billion sale of PropTech Divvy Homes to investment firm Brookfield and a $2.6 billion sale of its next insurance to Munich Re.
But then, in April everything began to change.
On April 2nd, known as the “liberation day,” Donald Trump announced swept tariffs on almost all of his major trading partners. High-tech companies have started to look like a blip as their inventory plummeted and their first quarter progress began to look like a blip.
A week later, Trump announced a 90-day hiatus on these tariffs, but now the market is in a remote state.
“As we headed towards 2025, which we might remember, people thought that things would really pick up in 2025,” Stellar Tucker, managing director of Truist Securities, told TechCrunch. “I don’t think a lot of that really happened. The outlook for now was pretty out of 2025. That’s a shame, because I think everyone entered 2025 with the idea that it would be a much better year than the past few people we struggle with.”
Volatile evaluation
There are several reasons why an unstable or uncertain public market can stall M&A activity.
One is the large public technology companies, many of the most active acquirers – are directly affected by tariff uncertainty. Their stock prices are hit, and some core products or supply chains may face tariff impacts.
“Large public companies will have a really tough time with their inventory dropping,” said Kyle Stanford, director of Pitchbook’s US Venture Capital Research, in an interview with TechCrunch. “Even if they have cash, they don’t want it to work in uncertain markets and things like spook investors,” Stanford said. With Stanford added, stock buybacks are “probably something you’re looking at in place of a company’s purchase.”
Another hurdle is price. Over the past few years, uncertainty about valuations has lingered, and many late startups have no longer deserved their 2021 valuations. But it’s not even specific that they are actually worth it.
“There’s a lot of interaction and it leads to significant uncertainty,” said Ronan Kennedy, head of the capital advisory team at investment firm B Capital. “Companies didn’t want to make a decision when they waited a few days.
Not a complete trading drought
Despite the slowdown, there are some transactions being made.
Thomas Enester, a partner at Mintz, a law firm focusing on The Hech Fundraising and M&A, told TechCrunch that the company that has been touched on selling feelers again this year is likely to be suspended in its efforts. When predicting a rise in M&A, this is in contrast to what I told TechCrunch a few weeks ago.
“The world was a very different place from March to January, but now we’re in a completely different place than three weeks ago,” Ernest said. “You’re not going to buy a house you (fear) that in a week it’s worth 20 or 30% (less) than what you paid for.
That said, not all M&As are driven by opportunities. Earnest said startups that can’t raise their next funding should probably pursue acquisitions with a lower rating.
“They were probably trying to endure the venture market coming back. If not, they would have to get used to the downround or acquisition at discounts,” Ernest said. “I think you’ll see the volume of trade there.”
Appropriately capitalized AI companies, private and cash-risking, are likely to snap small businesses, Earnest added. Just one case: Openai, which just raised a $40 billion funding round at the end of March, is rumoured to have acquired AI coding startup Windsurf for $3 billion.
As the second quarter unfolds, Pitchbook’s Stanford fears that events from the first few weeks of April could already be on the sidelines of M&A activities for the rest of the year. He added that if these tariffs resume in early July – after a 90-day suspension or during that time new transactions are struck, it may not be that important.
That stability won’t come until summer. This is a historically slow period of activity. Then there will be a slowdown in the fall, the fourth quarter, and the end of the year holidays.
It leaves a small window for a powerful M&A deal to accomplish.
“The steady outlook for 2025 at this point seems rather low, just for change,” Stanford said. “We all know how much the news has changed over the last two weeks, how small, how small and rough, who is getting exceptions, or what doesn’t.