Breaking records! The war in Iran did not stop the global wave of mergers and acquisitions. AI leads the way with Q1 transaction volume surpassing $1.2 trillion.

According to data from the LSEG, market volatility and valuation fluctuations triggered by the Iran war have not hindered corporate M&A activity. Trading volume in the first quarter exceeded $1.2 trillion, reaching a historical high, with trading matchmakers stating that more trades are in preparation. Although the number of transactions decreased by 17% compared to the same period last year, the size of companies being acquired and sold is larger, leading to a 26% increase in the total transaction amount. In the six largest transactions, four involved leading companies in the field of artificial intelligence. In April of last year, US President Trump initiated "Liberation Day" tariff measures, sparking a global trade war and causing trading activity to stagnate for several months. However, bankers and analysts say that since the end of February when the US and Israel launched airstrikes against Iran, despite the escalation of Middle East conflict, enthusiasm for M&A deals has not been dampened. Deutsche Bank Aktiengesellschaft's global head of M&A, Sam Kim, said: "This time, people are no longer waiting for the situation to improve, but recognizing that volatility is part of life and working within that framework. Dialogue has never stopped; companies are finding ways to complete deals in this environment, rather than waiting for everything to return to normal. This is the new normal." George Holst, global head of corporate coverage, industry, and consulting at BNP Paribas, said that the bank's transaction pipeline and volumes have increased by over 20% compared to last year. Surge in deals exceeding $100 billion Data shows that large deals, especially mergers and acquisitions of large tech companies, dominate the market. In the three months ending March 31, a total of 22 deals exceeding $100 billion were signed, setting a quarterly record. Aside from political turmoil such as that of GEO Group Inc, the development of artificial intelligence also influenced the start of the new year in the M&A market, creating winners and losers in the field of AI and driving four of the six largest deals. Data shows that three of the four transactions are related to equity acquisitions rather than traditional M&A, a trend that is becoming increasingly apparent and accounting for 29% of total transactions this quarter. Matchmakers say that M&A activity of software companies seen as losers in AI or vulnerable to AI impact has slowed down due to investors selling off stocks and decreasing valuations. Current M&A requires more caution The Middle East war has caused unprecedented interruptions in oil supply, soaring oil prices to record highs, and drastic fluctuations in company valuations. However, corporate boards have not abandoned M&A directly but are seeking to become more cautious. Philipp Beck, head of M&A for Europe, Middle East, and Africa at UBS Group AG, said: "The drive for deals lies in strategic considerations, not short-term market fluctuations." He pointed out that if market volatility persists for months rather than weeks and disrupts inflation, interest rates, and growth forecasts, "then market dynamics may change, but we have not reached that level yet." Beck added: "In recent years, we have witnessed a series of market disruptions, and market participants have also learned to deal with these shocks." John Collins, co-head of global M&A at Morgan Stanley, said that corporate clients still view M&A as a vital driver for their growth plans. He added, "If market volatility eases, we may see market dynamics similar to the busy second half of last year." Mega cross-border deals Beyond artificial intelligence and large tech companies, attention is also focused on cross-border transactions. Cross-border transactions can offset weaknesses in certain economies and mitigate some local issues such as supply chain disruptions. Andrew Woeber, global head of M&A at Barclays PLC, told the media: "Cross-border corporate activity is a significant trend we are observing. CEOs and boards are not waiting for the perfect timing." In the first quarter of this year, cross-border M&A activity increased by 47% YoY, reaching a record $454.7 billion. The US has been the primary target country for cross-border transactions, accounting for 52.4% of total cross-border transactions, followed by the UK at 11.5%. One of the most notable cross-border transactions was announced by the US-based McCormick & Company, Incorporated on Tuesday to acquire the food business of Unilever PLC in the UK, creating a global food giant with a market value of $65 billion. Additionally, French Engie announced last month the acquisition of UK Power Networks for $21.3 billion. For European companies facing a slowdown in domestic growth, conducting transactions in the US may be more attractive as the US has faster growth, higher enterprise valuations, and establishing branches in the US can circumvent US tariffs. Holst of BNP Paribas said: "We are seeing an increase in cross-border transactions as companies seek growth while also needing a local presence, not just as suppliers but to establish true economic presence."