Navigating Uncertainty Key Takeaways from the ACG M&A

Last night, the Hyatt Regency Irvine was buzzing with insight, strategy, and connection as industry leaders gathered for the highly anticipated ACG (Association for Corporate Growth) M&A event. This high-energy evening offered a powerful lens into the state of mergers and acquisitions across California and Orange County, while also addressing broader national and global economic concerns.

A Shifting Economic Climate and the Second Trump Economy

One of the central topics of the evening was the uncertainty surrounding the U.S. economy, particularly in anticipation of a possible second Trump administration. Tariffs and aggressive trade policies especially those targeted at China are shaping how companies approach growth, investment, and global partnerships.

Former President Donald Trump’s tariffs on China, first introduced in 2018, imposed duties on more than $360 billion in Chinese imports, affecting everything from electronics and machinery to consumer goods and automotive components. While intended to bring manufacturing back to the U.S., these tariffs also disrupted long standing global supply chains.

Tariffs: A Double-Edged Sword in M&A

Tariffs have introduced a layer of complexity to M&A activities. On one hand, reshoring and investment in domestic production have opened doors for some U.S.-based companies. On the other, businesses that rely on international inputs particularly from Asia face increased operational costs, slower turnaround times, and unpredictable sourcing.

These dynamics affect how deals are assessed and negotiated. Acquirers are forced to look deeper at operational models, supplier risk exposure, and the long-term sustainability of cost structures.

Key Impacts on M&A Dynamics

• Valuation Challenges The unpredictability of tariffs complicates financial forecasting. Traditional valuation models often fall short when sudden duties or import restrictions drastically change margins. Buyers and sellers must now factor in geopolitical risks as core variables in due diligence.

  
  

• Deal Structuring Adjustments Tariff risks have led to more complex deal structures. Contingent earnouts, tariff-related covenants, and risk-sharing mechanisms are becoming increasingly common, especially for companies with a significant China exposure.

  
  

• Supply Chain Disruptions Perhaps the most significant consequence of U.S. China tariffs is their ripple effect on global supply chains. Companies are re-evaluating supplier networks, shifting production to Southeast Asia or Mexico, and increasing investment in supply chain resilience. This transformation doesn’t happen overnight and it deeply influences M&A decisions, especially when evaluating target companies with heavy dependence on Chinese manufacturing.

  

China’s Role in the Equation

China remains a dominant player in global manufacturing, and many U.S. companies still rely on its infrastructure. However, continued tariffs could accelerate the “China Plus One” strategy where businesses diversify sourcing beyond China to mitigate risk. This geopolitical decoupling could redefine the competitive landscape, benefiting companies that have already made strides in localization or nearshoring.

Looking Ahead: Strategic Adaptation Is Key

The current trade environment underscores the need for flexibility and foresight in M&A. Whether it’s navigating tariffs, rethinking global partnerships, or preparing for shifts in political leadership, companies must remain agile. In times of change, events like ACG's M&A panel are more than just networking opportunities they’re essential moments of strategic calibration.