Donald Trump’s return to the White House could trigger a wave of M&A activity due to what observers expect will be a renewed deregulatory agenda.
Under the Biden administration, the Federal Trade Commission (FTC) has sued to block the proposed merger of supermarket giants Kroger and Albertsons, for example, arguing that it could reduce competition and adversely affect smaller grocery outlets.
It’s worth noting that some Republican lawmakers have sided with FTC chair Lina Khan’s approach. Also, Trump’s previous GOP administration wasn’t particularly M&A friendly. Some of the deals his Department of Justice (DOJ) blocked include AT&T and Time Warner; Sinclair and Tribune Media; Broadcom and Qualcomm; and DraftKings and FanDuel. His DOJ also required companies (e.g., Bristol-Myers Squibb and Harris Corp.) to make major divestitures to complete blockbuster transactions.
Still, stock markets initially saw robust advances following the 2024 election in anticipation of Trump’s economic policies, which are expected to mirror the hefty corporate tax cuts of his first term.
The 2017 Tax Cuts and Jobs Act, which cut taxes for wealthy individuals and businesses, is set to expire at the end of next year. But with the Republicans gaining control of both houses of Congress and the White House, further tax cuts may be on the docket. Not everyone is certain that Trump’s second term will have a positive effect on the IPO market, however.
“Trump’s tenure was marked by market volatility, trade wars, and abrupt policy changes, all of which could create an uncertain economic environment,” says Mike Bellin, US IPO leader at consultant PwC. “Companies might be hesitant to go public if they fear that sudden policy shifts could negatively impact market conditions or their business operations.” That said, many sectors could stand to benefit from the new administration’s policies, pointing to increased IPO activity. Fossil fuel companies may capitalize on expanded drilling rights while the cryptocurrency sector could benefit from a friendlier legal framework. Trump’s agenda includes establishing a Bitcoin Reserve and a crypto advisory council. In November, he nominated pro-crypto billionaires Howard Lutnick and Scott Bessent for Commerce Secretary and Treasury Secretary, respectively.
