The pipeline is stacked. Financing remains competitive. The consensus around European M&A enjoying a storming end to 2025 may seem remarkable after the volatility of “Liberation Day”.

Geopolitical risks certainly remain – from ongoing trade dislocation through to armed conflict and government budget wrangling. But waiting for the perfect deal window is a mug’s game in a world that has stepped back from multilateralism and institutional bargaining.

Volatility fatigue is real – meaning boards and investors alike are keen to get to work.

Global M&A and capital markets were “incredibly resilient in the face of significant macroeconomic, geopolitical, and policy volatility” in 1H25, Anu Aiyengar, JPMorgan’s global head of advisory and M&A, told Continental Drift. “Strong deal momentum has continued, and activity has accelerated even more, making this one of the busiest summers in the last 10 years,” she added.

You can never rule out US President Donald Trump making things interesting – the world’s biggest “known unknown”. There are nonetheless solid reasons to believe US trade policy will tread more lightly on deal execution in the coming months than back in April.

Yes, the ink had barely dried on the European Union (EU)-US trade deal in July, setting a baseline tariff of 15%, when Trump published a Truth Social post on 26 August threatening “substantial additional tariffs” on imports from countries imposing “digital taxes, legislation, rules or regulations”.

This broadside aimed at the EU’s Digital Services Act raised doubts about the stability of Trump’s trade agreement with the bloc.

But EU Commission President Ursula von der Leyen seems determined to do all she can to keep the deal on track. Von der Leyen reportedly benching competition chief Teresa Ribera from announcing a fine on Google parent Alphabet related to alleged adtech practices is a clear statement of intent.

Moreover, last week’s US federal appeals court ruling that many of Trump’s tariffs are unlawful may keep his attention focused on attacking domestic institutions, providing breathing room for European trade negotiators and M&A practitioners alike.

Sovereign scare

Of course, Trump’s assaults on Federal Reserve independence and perceived judicial enemies could dampen global market sentiment. Economists have been perplexed at the lack of rational risk pricing on US stock exchanges.

There has been a wobble this week. The VIX has climbed 8% since last week’s post-“Liberation Day” low of 14.14, peaking on 2 September at 19.31, before settling to an admittedly modest 15.30 today.

Tuesday also saw US Treasuries lose ground and many European sovereign yields – notably on long-dated paper in the UK, France and Germany – rise markedly. Though they’ve largely regained lost ground, this scare partly reflected concerns about executive branch capture of US monetary policy.

In the UK, Chancellor Rachel Reeves was already under pressure ahead of an autumn Budget bringing with it economic and political risk for dealmakers. Britain’s finances are grim and tax rises seem inevitable.

Last year’s Budget – which saw a hike in employer payroll contributions – rendered hospitality and other worker tax-sensitive sectors “uninvestible” until the P&L impact was clear, a veteran London-based bulge bracket banker said.

Wealth and property taxes, levies on banks have all been raised as possibilities in the feverish run-up to the Budget. The latter suggestion saw UK lender share prices fall markedly last Friday (29 August).

“What sector is next?” the banker asked. He will not find out soon.

Reeves has baked in a long autumn of uncertainty, setting the date for the Budget as 26 November.

And it’s not beyond a government capable of generating the headline “Housing Secretary admits not paying enough housing tax” to torpedo its own growth agenda through inelegant fiscal policy.

But most London advisors speaking to Continental Drift envisage Reeves’ tax hikes hitting their personal pockets, rather than derailing the UK deal pipeline. One blue chip deal lawyer boasted he was buried under “piles of offer letters” from determined suitors.

A political scalp almost certain to be claimed by budget shenanigans is that of France’s Prime Minister Francois Bayrou. His minority government is tipped to lose a parliamentary confidence vote on 8 September.

Bayrou’s proposals to control public finances in the second largest eurozone economy, with a 2025 deficit forecast at 5.6% GDP, were widely reviled. Still, his defenestration won’t change impossible parliamentary arithmetic in the National Assembly.

Potential social unrest from Bloquons tout (“block everything”) protests planned across France from 10 September could yet congeal with concerns about France’s fiscal sustainability – especially if President Emmanuel Macron is unable to appoint a new premier.

There has already been a market impact. French banking giants BNP Paribas, Societe Generale and Credit Agricole have collectively lost 6.8% on the Paris bourse since Bayrou called the vote last week.

Teutonic turnaround

Yet there is no denying Europe’s back-to-school M&A period has kicked off in style.

CapVest’s buyout of German pharmaceutical giant Stada Arzneimittal at a reported enterprise value of EUR 10bn, announced on Monday (1 September), is a shot in the arm.

Such sponsor deployment aligns with a key driver of European optimism: the German government spending bazooka.

Chancellor Friedrich Merz’s emergence as an unlikely fiscal activist, embracing EUR 1tn in deficit-financed largesse across defence, infrastructure and energy transition, promises to crowd in private capital after decades of underinvestment.

Apollo Global Management last month unveiled plans to deploy EUR 100bn in Germany over the next decade to support the country’s growth initiatives. The private equity giant’s President Jim Zelter visited Germany three times in 2Q25.

Consensus can be a dangerous place if groupthink coalesces around shaky evidence. We’re not there.

Confidence about Europe’s M&A outlook is well founded – financing is available, buyers are disciplined, and dealmakers have accommodated themselves to a more volatile operating environment.

Clear geopolitical risks require a watchful eye. But European rainmakers seem eager to put their faith in the art of the deal.

Continental Drift is a weekly column offering commentary on the macroeconomic, political, and policy forces shaping the M&A landscape across the US and Europe. The opinions expressed here are those of the writer only.