The global M&A market is facing an unprecedented 'stress test'. After the sudden imposition of tariffs by the Trump administration caused severe market turbulence, bankers are frantically modifying contract terms at the merger and acquisition tables from Silicon Valley to Milan. The latest data shows that the global M&A transaction volume in the first half of April plummeted by 29% year-on-year, marking the worst start since 2020. In this crisis, a 'terms revolution' involving billions of capital is quietly unfolding.

The Art of Risk Avoidance at the Trading Table

When Trump suddenly announced comprehensive tariffs on April 2nd, executives at Global Payments were finalizing a $24.3 billion three-way merger. As the company's stock price plummeted by 15% in two days, they had to recalculate their valuation overnight and ultimately decided to use the stock price of $97 before Liberation Day as the benchmark, even though the stock price had already fallen to the $80 range at that time. This "time reversal" pricing strategy has become a typical response in turbulent markets.

More sophisticated operations appeared in the transaction between Silver Lake Capital and Intel. Faced with the $4.46 billion Altera acquisition, both parties creatively split the payment into three phases, with the final $1 billion deferred until 2027. This "installment payment" model not only preserves transaction valuation, but also enhances Silver Lake's internal rate of return through delayed payments. As Heck, Vice Chairman of Mergers and Acquisitions at Deutsche Bank, said, "We are witnessing a resurgence of transactions with contingent clauses following the 2008 financial crisis

The polarized M&A landscape

The severe fluctuations in the market are accelerating the polarization of the M&A market. On the one hand, strategic deals such as Prada's acquisition of Versace, which have been brewing for months, are still progressing. These two Italian luxury brands have been negotiating since November last year and finally reached a $1.38 billion agreement on April 10th. As industry insiders have said, "Truly strategic transactions will be completed in any market environment

On the other hand, more transactions are facing "emergency surgery". When multinational insurance company Ageas acquired ESURE in the UK, the team had to simulate multiple economic scenarios. Bankers have revealed that nearly 30% of current transactions are renegotiating loan terms or designing special financing structures to fill valuation gaps. This' clause game 'has become the new norm in the M&A market.

Summary: When capital encounters political uncertainty

Trump's tariff stick is rewriting the game rules of the global M&A market. From chip deals in Silicon Valley to luxury mergers and acquisitions in Milan, capital is seeking a way out in the midst of political uncertainty. Behind this' terms revolution 'is the bankers' difficult defense of market confidence. As the tariff war continues, players who can both adhere to the valuation bottom line and flexibly design transaction structures may become the ultimate winners of this capital game.

Analysts point out that the VIX panic index may climb, causing short-term speculative funds to withdraw from high-risk assets and shift towards defensive sectors such as utilities and healthcare. Policy uncertainty weakens investors' confidence in the US dollar, and if the independence of the Federal Reserve is further questioned, it may lead to long-term capital outflows to safe haven currencies such as the euro and yen, and the demand for safe haven gold is expected to further increase. In addition, if the US dollar continues to weaken, gold prices may further rise.