Tariffs Complicate 2025 M&A Outlook

May 1, 2025
M&A activity in the equipment finance industry remained constrained for much of 2024, held back by persistently high interest rates, political uncertainty, and global instability. At the start of 2025, optimism was building. With interest-rate cuts underway, improved business confidence, and a pro-business administration in place, industry conditions suggested a more active M&A landscape may be ahead. Alta Co-CEO Jim Jackson, who leads Alta’s Mergers & Acquisitions Practice, reviewed the 2024 M&A landscape in an article that appears in the March/April 2025 edition of the Monitor. Since that article was written, the introduction of trade tariffs has introduced significant uncertainty into the equipment leasing and finance market. These tariffs have led to expectations of higher prices for new and leased equipment, disruptions in supply chains and increased difficulty in obtaining critical parts for maintenance, repairs and servicing. As a result, businesses are facing greater operational risks and cost volatility, complicating long-term planning and asset-management strategies.
The impact of this uncertainty is reflected in the Equipment Leasing and Finance Foundation’s Monthly Confidence Index, which stood at a record high of 69.6 in January of 2025, but has since declined significantly to 41.9 in April. In addition, the Foundation projects slower growth in the Q2 update of its U.S. Economic Outlook, with 2025 equipment and software investment growth forecast down to 2.8% from 4.7% and U.S. GDP projected growth down to 1.2% from 2.7%.
Interest Rate Volatility Clouded 2024
The Federal Reserve’s aggressive inflation-fighting strategy—seven rate hikes in 2022 followed by four more in 2023—pushed interest rates to their highest level in over two decades. Early in 2024, markets anticipated a pivot to rate cuts.

“Unfortunately, persistently high inflation rates combined with low unemployment and strong jobs reports in the first half of 2024 delayed the Fed’s proposed rate cuts,” Jackson writes, “creating more uncertainty and confusion about the economic environment.”
After making rate cuts of 50 basis points in September, 25 basis points in November and another 25 basis points in December of 2024, the Fed ended the year signaling that future cuts could be limited. The current administration is looking for rate cuts to help spur the economy and offset some of the uncertainty associated with the tariffs; however, Federal Reserve Chair Jerome Powell believes the tariffs will result in increased inflation, and as a result, is hesitant to make any rate adjustments until there is more clarity, creating more unease in the economic outlook.
Adding to dealmaking hesitation in 2024 was the unknown outcome of the 2024 U.S. presidential election. With two candidates offering starkly different visions on taxes, regulations, trade, and energy policy, many companies chose to wait for clarity before moving forward with deals. Ongoing wars in Europe and the Middle East further complicated the outlook for government spending and overall economic health.
Momentum Stalls Amid New Risks
The second half of 2024 brought encouraging signs. Lower rates improved deal economics, and the equipment finance industry itself showed remarkable resilience. According to the Equipment Leasing and Finance Association’s CapEx Finance Index, new business volume rose 4.8% year-over-year from 2023 to 2024, with banks accounting for 62% of total volume. Portfolio performance also remained strong, with delinquencies falling and profitability reaching record highs at many firms.
As The Alta Group pointed out in its 2025 Insights report, the unpredictability surrounding current policy decisions poses a potential weight on the business environment. The March 2025 CapEx Finance Index showed a combination of strong demand and potentially weakening credit conditions. New business volume grew by 9.8% year-over-year, but losses rose to 0.60%, the highest level since September 2020.
As Jackson wrote for the Monitor, “If import tariffs are implemented, it may take some time to determine the long-term impact—if any—on the supply chain, prices and inflation rates, as well as their effect on equipment demand and the availability of new equipment or parts needed for repairs and maintenance.” The Alta Group discussed several ways the tariffs could impact the industry in a blog post published days after they were announced.
M&A activity has been limited thus far in 2025, with the exception of two notable transactions. In April, North Mill Equipment Finance completed the acquisition of Pawnee Leasing Corporation from Chesswood Group Limited pursuant to a court supervised sale process. In addition, Onset Financial acquired Channel and its subsidiaries, a provider of small-ticket equipment finance and working-capital solutions to create one of the largest independent finance companies.
What to Watch in 2025
Looking ahead, several factors could drive M&A activity upward:
- Aging ownership among independent finance companies, prompting more succession planning and potential sales.
- Private equity exits as firms seek liquidity after holding investments longer than anticipated.
- Continued interest in lift-out teams, as strategic buyers look to enter new markets or expand offerings.
- Liquidity at banks continues to improve and the capital markets are making a return to normal, which may lead to more interest in M&A activity.
However, challenges remain. Inflation is still above the Fed’s 2% target, and credit quality indicators are flashing early warning signs. Charge-offs rose to 0.52% in December 2024, and credit card debt hit a record $1.166 trillion. In addition, the potential expiration of key Tax Cuts and Jobs Act provisions and new tariff policies could reintroduce uncertainty in the second half of the year.
Final Thoughts
While 2024 was another muted year for M&A in equipment finance, economic conditions and uncertainty continue to dampen the outlook for a more active 2025. Buyers are showing renewed interest, but they are increasingly selective. The Alta Group can assist sellers considering an exit now by positioning them to prepare early to optimize value, especially as strategic and financial investors return to the market.
Independent equipment finance companies remain attractive targets—particularly those with strong portfolios, market niches, or leadership teams open to transition. With the right preparation and alignment, 2025 may offer compelling opportunities for both buyers and sellers.
Read Jim Jackson’s article in the Monitor.
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