USA Law and Practice Contributed by: Vijay Sekhon, Brien Wassner, John Godfrey and Justin Macke, Sidley Austin LLP
Sidley Austin LLP 787 Seventh Avenue
New York NY 10019 USA
Tel: +1 212 839 5300 Fax: +1 212 839 5599 Email: bwassner@sidley.com Web: www.sidley.com
1. Transaction Activity 1.1 Private Equity Transactions and M&A Deals in General Private equity and M&A deal flow in the US has been subdued during the last 12 months due to macro- economic and geopolitical uncertainties alongside elevated interest rates. Alternative strategies, includ - ing carve-outs, minority investments, structured equi - ty, and consortium deals remain central for private equity firms as traditional buyouts have been limited by increased cost of debt financing. Market sentiment improved in 2024 as inflation eased and the US Federal Reserve modestly cut interest rates, resulting in deal value increasing year-over-year even as deal counts remained steady. However, global tensions have added macro-economic uncertainty and stalled M&A activity in early 2025. M&A deals have focused on technology, energy and infrastruc - ture transactions. 1.2 Market Activity and Impact of Macro- Economic Factors Sector Trends Technology continues to lead US deal flow, with M&A activity in the sector rising 36% year-over-year while deal value grew approximately 40% through the first half of 2025. Investor demand has remained strong in areas such as artificial intelligence, cybersecurity, and enterprise cloud platforms. In the first half of 2025, technology transactions accounted for about one third of all billion-dollar deals in the US.
Energy and infrastructure followed closely behind technology M&A. In H1 of 2025, North American elec - tric energy M&A more than doubled in value compared to H1 2024, fuelled largely by surging demand from AI and data-centre infrastructure deployment. Aero - space and defence also emerged as a major driver of volume, with deal value increasing nearly eightfold as sponsors pursued platforms tied to national security and defence supply chain. Healthcare saw a modest dip in overall activity, with M&A volumes in the sector comprising roughly 10% of global deal value, down slightly from 2023. Still, large- cap pharmaceutical companies remained acquisitive, particularly in transactions focused on clinical-stage pipeline assets. Financial and business services trans - actions held steady, while sectors more sensitive to interest rates, such as real estate and consumer dis - cretionary, continued to face headwinds. Macro-Economic and Geopolitical Environment The macro-economic backdrop began to shift in 2024. Following two years of high interest rates and persis - tent inflation, financing conditions began to ease. The US Federal Reserve modestly cut rates, and private credit lenders played an increasing role to fund trans - actions where banks remained cautious. However, global tensions have added macro-econom - ic uncertainty and have stalled M&A activity in 2025. The wars in Israel, Iran and Ukraine, US–China ten - sions, and newly introduced US tariffs contributed to heightened caution among private equity firms, par - ticularly in cross-border transactions and regulated
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