Global dealmaking slowdown signals rising risk for equity markets

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Global dealmaking slowdown and risk

Highlights

A difficult backdrop marked by rising interest rates and weak hiring has led to postponed IPOs for OpenAI, Oura, and SB Energy.
Global M&A in Q3 fell below $1tn, impacting boutique banks like Evercore, which is down nearly 25 percent in 2025, while Perella Weinberg is near a sale.
Despite volatile dealmaking, New York broker-dealer profits hit $46bn in H1 2025, up 50 percent, with Goldman Sachs' investment banking fees expected to rise 30 percent year-on-year.

Market conditions curb deals and listings

As reported by Financial Times, several prominent listings, including those of OpenAI, Oura and SoftBank-backed data centre builder SB Energy, have been postponed as market conditions grow less supportive for risk-taking.

While the reasons differ by company, the broader backdrop is becoming more difficult. Interest rates are rising, lifting companies’ cost of capital, while higher prices, elevated mortgage rates and weak hiring trends are weighing on consumer confidence.

The strength of the S&P 500 also masks a narrower market dynamic. Technology makes up 40 per cent of the index and has significantly outperformed the more broad-based Russell 2000, meaning the headline rally does not fully reflect sentiment across the wider corporate and financing landscape.

Large technology groups such as Alphabet and Meta Platforms are also insulated by established cash-generating advertising businesses. That distinguishes them from lossmaking pure-play AI businesses such as SB Energy, which are more exposed to swings in investor appetite and financing conditions.

Pressure spreads across banks and corporate strategy

In the third quarter, global M&A fell below the $1tn threshold, a sign that the slowdown is reaching the wider advisory market. Boutique investment banks that depend heavily on deal fees are feeling the pressure, with Evercore shares down nearly a quarter this year, while Perella Weinberg is reportedly close to a sale to a more diversified rival.

Big banks are holding up better because market volatility is supporting trading revenue. The State of New York says broker-dealers posted record first-half profits of $46bn, up 50 per cent from 2025, and analysts tracked by LSEG expect Goldman Sachs' overall investment banking fees to rise 30 per cent for the full year, faster than in 2025.

Some transactions are still moving ahead, especially where strategic logic and cost-cutting potential are clear. Starbucks has examined an acquisition of Chipotle Mexican Grill, an example of the kind of share-swap deal that could still proceed in a tougher market.

The underlying rationale for deals has not changed, as companies still need growth, stronger competitive positions and access to capital. What is shifting is executives' willingness to take risk, and the gap between strong stock prices and weaker deal volumes is likely to close if equity markets eventually soften.

We previously reported on mounting stress in the high-yield bond market, where rising borrowing costs pushed yields higher and widened credit spreads. The strain was most visible in the lowest-rated CCC segment, signaling growing investor caution even as broader credit fundamentals remained relatively stable. These funding-market warning signs help explain why riskier companies are finding capital more expensive and why appetite for deals and IPOs can cool even when equity benchmarks look resilient.

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