U.S. M&A boom driven by regulatory easing and landmark deals in 2025

The anticipated resurgence of merger and acquisition (M&A) activity under the Trump administration’s Make America Great Again agenda initially met with significant challenges, as regulatory scrutiny and market volatility dampened dealmaking momentum early in 2025. Despite market expectations of a more business-friendly environment, two high-profile antitrust lawsuits filed by the Department of Justice (DOJ) and the Federal Trade Commission (FTC) created uncertainty that tempered corporate appetite for large-scale transactions.

The first major challenge arose within ten days of the inauguration when the DOJ sued to block Hewlett Packard Enterprise’s (HPE) proposed $14 billion acquisition of Juniper Networks. The DOJ argued the merger would reduce competition in the wireless networking market by consolidating HPE and Juniper’s positions, potentially leaving Cisco Systems and the merged entity to control over 70% of the U.S. market, thereby raising prices and stifling innovation. This move was notable as the administration’s first significant antitrust action, seemingly at odds with expectations for deregulation. Juniper Networks countered these claims, stating that the DOJ misrepresented market dynamics; they maintained that numerous competitors exist and that Cisco alone has dominated the market with over 50% share for a decade, while HPE and Juniper combined hold less than 25%. Juniper contended the merger would enhance competition against Cisco rather than restrict it.

In June 2025, the DOJ and HPE reached a settlement that allowed the acquisition to proceed. The agreement required HPE to divest its Instant On wireless networking business and license Juniper’s advanced Mist AI software source code. This compromise addressed the DOJ’s competitive concerns while avoiding a lengthy trial scheduled for July. The resolution underscored the regulatory challenges that initially chilled the M&A landscape but also hinted at a shift toward pragmatic dealmaking as the year progressed.

The second high-profile lawsuit involved the FTC suing to block the $611 million acquisition of Surmodics by private equity firm GTCR, marking an unprecedented challenge in blocking a public company buyout by a private equity firm on antitrust grounds. However, this aggressive regulatory stance suffered a setback when the FTC lost in court, allowing GTCR to complete its acquisition in November. These regulatory defeats, coupled with budget cuts to both the DOJ and FTC under broader federal austerity measures, have diminished the capacity and willingness of regulators to aggressively pursue merger challenges.

As the initial market volatility linked to trade tensions subsided through 2025, deal activity gained substantial momentum. Reduced regulatory interference, combined with supportive capital markets, created fertile ground for a surge in significant transactions. Deal values in the U.S. rose more than 40% year-over-year to nearly $2 trillion, with nearly double the number of megadeals (valued over $10 billion) announced compared to 2024. This wave of transactions included noteworthy deals such as Kimberly-Clark’s $48.7 billion merger with Kenvue, Clayton, Dubilier & Rice’s $10.3 billion leveraged buyout of Sealed Air, and Abbott’s $23 billion acquisition of Exact Sciences.

These developments have three key implications for merger arbitrage investors and practitioners. Firstly, the expanded pool of public M&A deals has created a supply-demand imbalance for arbitrage capital, leading to elevated spreads. In early November, the number of announced but not yet closed U.S. deals hit 95, a record since data tracking began in 2010. Secondly, regulatory clarity and reduced scrutiny have accelerated deal closure timelines, enhancing internal rates of return for arbitrageurs. Lastly, fewer regulatory challenges translate into lower risk of deal termination, improving potential returns.

According to AccelerateShares’ AlphaRank analytics, merger arbitrage yields have reached an average annualised return of 8.9%, significantly outpacing Treasury bills and high yield bonds by substantial margins. This robust environment has coincided with the resurgence of megadeals, contributing to a highly active M&A market that industry observers refer to as the return of “mergerville’s” good times.

Nevertheless, the durability of this favourable dealmaking climate remains uncertain amid evolving geopolitical tensions and potential shifts in regulatory priorities. Still, for now, corporations and investors appear to be capitalising on a deregulatory regime and buoyant capital markets that have rekindled Wall Street’s enthusiasm for large-scale mergers and acquisitions.