I want to start by rewinding the clock to January of this year. New administration, new excitement from the business world. Animal spirits felt like they were out in force a little bit. How did the year start off in tech M&A circles?

You hit it. It was supposed to be a ripping year in which a lot of pent-up demand came to market. To understand what's really happening, you actually have to rewind a little bit further. You have to go back to 2021, a period coming out of COVID where we saw takeover values and multiples go through the roof to levels that were beyond unprecedented. There was an incredible amount of deal activity in that year, by far and away the largest year for tech M&A in history.

But not everyone got their deal done. When we came into 2022 and 2023, we started to have geopolitical events, Russia and Ukraine. These types of things caused a lot of sellers to push the problem down the road and say, "I thought this was going to be my year, but I'm looking to 2023 or 2024." So you've got a whole class of folks who have been waiting to come to market, but who have felt stuck. With the turnover in the administration, there was a broad consensus across dealmakers that we would finally see this massive release of pent-up activity.

To be honest, we weren't really seeing that early in the year. We were seeing more enthusiasm, for sure. We were seeing the bid-ask spreads in deals narrow, for sure. We weren't seeing quite the release that we all expected. And then we got to April, and everything stopped very, very suddenly. I think that's a function of both the scope of tariffs and the depth of tariffs. Everyone knew tariffs and protectionism were going to be on the agenda, but no one expected so much so fast. What is remarkable about it is that it was almost as if a switch flipped overnight. Everything froze in place, and that's where we are right now.

You said the switch flipped overnight. If we look at the first quarter of this year, was there trepidation and a rush to get deals done by April 1st? Or was there not a lot of that concern in the market, and then the switch just absolutely flipped?

What we expected to see coming into the year was assets coming to market early in the new year. What we actually saw before the tariffs was a lot of sellers committing to a transaction this year, but not necessarily at the beginning of the year. There was a collective moment of, "Let's just let this administration get the cabinet sorted out. Let's make sure it's not going to be quite as chaotic as it may have been last time around. But we're going this year, assuming the world is normal." And on April 1, the world just became an awful lot less normal. So here we are.

Now, I will also say there is a broad consensus, and you hear a lot of people make this point, that the factors that have gummed up the works are self-imposed. They're based on decisions that can be undone. It's not a fundamental problem in the economy. It's not a housing crisis. It's not something that has an immediately perceivable risk of contagion. So as much as everyone is frozen, there are a lot of games of chicken happening between buyers and sellers. People expect it to be a bit like ripping off a Band-Aid when some large trade agreement is negotiated. With one or two signs like that, people are saying we could be back to the dance abruptly.

If we focus on what we know best, which is technology companies, relative to tariffs across all different kinds of industries, what effect have you observed over the past few weeks? Has deal momentum come to a complete halt? Is it a trickle? Is it, as you said, kicking the can down the road and slow-rolling to see how things go?

Really interesting, Eric. What we are seeing is that processes that were well underway before all of this came, and by well underway I mean they probably have first-round bids and they're in the second round with a narrower group, have for the most part continued to proceed, provided that financing is not newly problematic as a result of the tariffs.

Now, there are exceptions. If your buyers are strategic parties whose products or strategy are particularly exposed to tariffs, those boards are saying timeout. It's not the time for strategic activity. But for the most part, if you were far along and did not have a problem getting financing, you are still moving, and we have a series of those transactions that we think will get done. If you were about to launch your process, or you were very early in your process and some of your buyers are impacted by tariffs, you have called for a pause and you're waiting.

I will say we are starting to see, and it is very early, as of just the last two days, some action in the syndicated loan market, which is very important, particularly to financial sponsor activity. That's the class of buyers that, regardless of what is going on in the world, has to do deals. They have to transact, unlike a public company board. Since the tariff news broke, the syndicated loan market has just not been there, and folks have had to look to direct lending solutions. We're starting to see things like buyers submitting bids with highly confident letters from big syndicated bank organizations, as opposed to just the more narrowly focused direct lenders. So that's a good early sign of some restoration of activity.

From your conversations with your colleagues, what are they seeing across the board? If we pause for a moment and reflect across all industries, is it different, or are the expressions similar to the ones you're seeing in tech?

Similar, but in some cases more or less severe, depending on the sector. I think most people will tell you that the healthcare sector and healthcare M&A are probably going to do better in a cycle like this. For some of the more heavy industrial businesses, with complex supply chain logistics that have multifaceted tariff impacts, it's much tougher.

If you abstract beyond M&A and look at some of the other products that we offer, like financing, equity, and trading, the one common fabric you will hear no matter who you talk to in the firm is that the immediate moment is not sustainable, and it will change. Everyone is trying to find a way to get their deal done, regardless of which sector or which type of deal it is. The status quo is not going to be an option for long. That could be because of something in the administration, and we've seen a little bit of a softening of posture over the last week, so that could be part of it. It could also be a matter of folks eventually deciding, "I'm going to have to transact through the noise, because I have a capital need. My cash burn is too high. The best buyer wants to move right now. As a result, I'm going to forgo a broader auction and try to get that done."

What guidance are you giving the executives, companies, and folks you're partnering with right now, in terms of what they should be doing today, if anything? And what is likely to happen for the rest of 2025, in your opinion?

Great question. On the buy side, we are constantly people that to the extent there are sellers or businesses in their frame of interest that are at all willing to have a discussion today, it is a great time to do it, provided that you can get the financing, because a lot of the buyers are deactivated. So there is less tension in these processes. If activity picks up, if the president backs off in a significant way, some of these will become a lot more competitive.

On the sell side, we had probably been spending 60% or so of our time with our clients preparing around the AI angle. That's what we all thought we were going to spend the year talking about. That turned almost 180 degrees overnight into a discussion about timing your deal. People want to understand when the market is going to be healthy. I will say there are an awful lot of folks who look at the world right now and say, "I don't know exactly when, but Labor Day feels like a good flag post." People don't want to launch an M&A deal into the month of August, for a whole host of reasons.

I will also say that people see some benefit to waiting that long, because as you start to push to September and beyond, stylers will be marketing heavily into their calendar 2026 numbers, trying to get credit for the bigger number than 2025. So they see a silver lining there. They're like, "Well, I may wait, but if I do, we're going for it, and we're getting full credit for the full year forward."

So maybe it's best put as steady as she goes for the time being, and then revisit in a more full-throated way toward the very end of this year?

That's right, with one asterisk, which is that you have to be ready to go very, very fast, because this can change very fast. For our sellers, the rubric of a tech sell-side process is extremely well established at this point. To do it the right way, there's anywhere from three weeks to two months of prep work: commissioning studies, getting a quality of earnings done. We are counseling people to get all of that work done now and have your process in a box that you can pop open and press go at the drop of a dime.