Donald Trump’s return to the White House could spark a wave of mergers and acquisitions activity due to what observers expect to be a renewed deregulation 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 negatively impact smaller grocery outlets.
It is worth noting that some Republican lawmakers have sided with FTC Chairwoman Lina Khan’s approach. The previous Trump GOP administration was also not particularly friendly to mergers and acquisitions. Some of the deals blocked by the Department of Justice (DOJ) include AT&T and Time Warner; Sinclair and Tribune Media; Broadcom and Qualcomm. And DraftKings and FanDuel. The Department of Justice also required companies (e.g., Bristol-Myers Squibb and Harris Corp) to undertake significant divestitures to complete large transactions.
However, stock markets initially saw a strong rally after the 2024 election in anticipation of Trump’s economic policies, which are expected to reverse the massive corporate tax cuts of his first term.
The Tax Cuts and Jobs Act of 2017, which cuts taxes on wealthy individuals and corporations, is scheduled to expire at the end of next year. But with Republicans in control of both houses of Congress and the White House, more tax cuts may be on the agenda. However, not everyone is sure that Trump’s second term will have a positive impact on the IPO market.
“Trump’s tenure has been marked by market volatility, trade wars, and sudden policy changes, all of which can create an uncertain economic environment,” says Mike Bellin, head of U.S. IPOs at consultancy PricewaterhouseCoopers. “Companies may hesitate to go public if they fear that sudden shifts in policy could negatively impact market conditions or their business operations.” However, many sectors could benefit from new management policies, indicating increased IPO activity. Fossil fuel companies may benefit from expanded drilling rights while the cryptocurrency sector could benefit from a friendlier legal framework. Trump’s agenda includes creating a Bitcoin reserve and a cryptocurrency advisory board. In November, he nominated pro-crypto billionaires Howard Lutnick and Scott Besent to be Commerce Secretary and Treasury Secretary, respectively.
