Confidence is Hanging on by a Thread

Just over half of respondents (51%) expect U.S. M&A activity to strengthen over the next 12 months, a sharp decline from last year’s outlook. For the 10% who expect the market to weaken outright, economic uncertainty (49%), valuation gaps (48%), and financing costs (47%) emerged as the highest hurdles to clear.

The valuation gap appears to be the more persistent drag. Just 41% of respondents agree that buyer and seller price expectations will become more aligned this year, suggesting a divide between what sellers want and what buyers are willing to pay remains wide. Capital availability doesn’t appear to be the constraint, with nearly half of respondents citing it as a top driver of activity. The gap lies in agreement on price, not in access to funding.