Will Trump’s new antitrust enforcers help make M&A great again?

Animal spirits are back on Wall Street. The return of “Merger Monday” this week, with a wave of large transactions being announced at the same time, was the strongest indication yet that dealmakers are gearing up for a robust comeback under president-elect Donald Trump. 

The recent surge in activity — $35bn in transactions in a single day — reflects dealmakers’ excitement over the imminent exit of President Joe Biden and his progressive trustbusters: Lina Khan, chair of the Federal Trade Commission, and Jonathan Kanter, head of the Department of Justice’s antitrust division. 

Financiers of all political stripes have argued that Trump would spark a return to Ronald Reagan-era deregulation, reigniting the mergers and acquisitions boom that stalled two years ago in large part due to a crackdown unleashed by Khan and Kanter that scared off dealmakers.

The reality is likely to be more complex, however. Trump’s replacements at the FTC and DoJ have left many wondering whether a return to more traditionally conservative antitrust policy is on the cards. Some fear that the more populist wing of the Republican party, led by vice-president-elect JD Vance, will politicise antitrust against disfavoured businesses or sectors, dampening deal activity.

There is also a sense that Trump’s nominees may embrace parts of the Biden administration’s aggressive antitrust agenda.

Gail Slater, whom Trump has picked to lead the DoJ’s antitrust division, is a close aide of Vance. The Republican senator has praised Khan’s work and embodies Maga populism against anti-competitive practices, Big Tech’s cultural dominance and Wall Street greed. 

Republican FTC commissioner Andrew Ferguson, who has been selected to chair the agency, has privately vowed to undo parts of Khan’s agenda, including regulation he deems burdensome and tough merger scrutiny, according to Punchbowl News. After Trump announced his intended nomination, Ferguson said the FTC would also “end Big Tech’s vendetta against competition and free speech”.  

“There’s this tension between the populist and the deregulatory approach, and that’s like all of Trump,” said one of Wall Street’s top dealmakers, who asked not to be named to avoid the ire of Republican regulators. 

“Ultimately, we will be returning to assessing deals on real economic terms and how it impacts prices of goods and services. But you never know. In politics, it’s all a political game,” he added.  

William Kovacic, a former FTC chair, said that “the shared populism” of the Democratic and Republican parties “on some issues has the possibility to surprise us about where they might find common cause to deal with big enterprises in areas like pharma or food”.

The president-elect has also picked Mark Meador, a former antitrust enforcer, to serve as an FTC commissioner. He is seen as favouring the tough enforcement stance championed by Khan and Kanter, even more so than Ferguson.

Frank Aquila, a top M&A lawyer and partner at Sullivan & Cromwell, believes that a return to moderately conservative antitrust policy is the most likely outcome. 

“While many would love to see the return of the Reagan-era M&A antitrust approvals, that is not likely, although it will certainly be much less restrictive than we’ve seen under President Joe Biden,” said Aquila. “I’m cautiously optimistic that antitrust merger clearances will be quicker and less onerous than under the current administration.”

Regardless of how things play out, there is a sense that deal activity cannot drop any lower than it has in the last two years, when it has gone below $3tn for the first time since 2013 — it was $2.9tn in 2023 and looks set to be the same level in 2024. 

Steven Baronoff, chair of global M&A at Bank of America, said the pipeline was strong given the “pent-up demand” for deals, as many chief executives had been waiting for the US election outcome before moving ahead with a transaction.  

“All the conditions that are good for M&A seem to be in place right now. So when you’re in boardrooms talking to CEOs, confidence is high. The stock market is performing well, financing is there and plentiful, consumers hanging in,” Baronoff said at the FT Investing in America Summit.

“What was holding back deals before was the uncertainty. People didn’t know who was going to win, didn’t know what kind of rules . . . priorities, policies were going to be in place. Now we know very clearly: Republican president, Senate and House,” added Baronoff. “Now that they know, people can start working . . . on those deals.”

Big Tech, however, will probably remain a prime target of antitrust enforcers.

The new generation of populist Republicans seeks to use antitrust to fight on rightwing social issues, including the alleged censoring of conservative voices on online platforms — a theme in many of Trump’s nomination announcements.

“Big Tech has run wild for years, stifling competition in our most innovative sector and . . . using its market power to crack down on the rights of so many Americans,” Trump said when announcing Slater’s nomination, urging her to “continue . . . fight[ing] these abuses”.

A leading corporate lawyer who has advised some of Silicon Valley’s largest companies said that Big Tech “is very concerned about the new antitrust administration” as there is a sense that it will be used to settle old scores and gripes Trump has with many of their platforms. 

“For me things aren’t looking great. My clients are going to continue to stay on the sidelines. These guys are worse than Kanter and Khan . . . [Kamala] Harris would have put in place more normal people, removing all the super-leftists,” said the top tech lawyer. 

Although he has publicly railed against Big Tech, Ferguson privately pledged to reverse Khan’s scrutiny of other tech areas, namely artificial intelligence — a move that, according to one top banker, would please the venture capital investors who have bankrolled Vance and other Republicans. 

As for Slater, a senior tech lawyer said it was too early to judge her, highlighting that the Oxford-educated enforcer had previously worked at Magic Circle law firm Freshfields as well as in tech.

“People who know her say she is smart and level-headed despite being Vance’s aide,” the lawyer said. “We’ll find out.”