Iran Conflict May Disrupt Deal Timelines, but Not Impede Mergers and Acquisitions, McMaster Warns

Mergers and Acquisitions Activity to Remain Resilient Despite War with Iran

According to Lazard Inc.'s global head of mergers and acquisitions, Mark McMaster, the ongoing conflict with Iran is unlikely to significantly impact overall M&A activity. The key factor in this scenario is the duration of the conflict, which will influence the extent of potential supply-chain disruptions, inflation, and oil price fluctuations.

Large Corporate Buyers Remain Active

Despite geopolitical uncertainty, McMaster points to several trends supporting dealmaking. Large corporate buyers have been active, with deals valued at over $10 billion increasing by approximately 120% from the same period last year. These deals now account for roughly 30% of the market, a shift that McMaster expects to continue.

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Midsize Companies Streamline Portfolios

Midsize companies are streamlining their portfolios by shedding slower-growing businesses and focusing on areas with stronger long-term growth. This trend is also driving take-private deals, particularly among smaller companies that lack scale or face operational challenges.

Financing Remains Available, but at Higher Costs

While capital remains available across both public and private markets, companies are increasingly pursuing multiple financing options in parallel to secure the best terms. Lenders are becoming more selective, with a greater emphasis on underwriting standards. McMaster notes that good companies will likely secure financing, while mediocre companies may face more difficulty.

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Valuation Gaps Persist in Public Company Deals

Persistent valuation gaps remain in public company deals, with buyers and sellers struggling to agree on price in volatile markets. McMaster predicts that leverage will amplify swings in sectors such as software.

Artificial Intelligence to Remain a Key Driver of Deal Activity

McMaster highlights artificial intelligence as a key driver of deal activity, particularly in infrastructure and AI-focused transactions. While 2025 was an incredible year for software M&A, uncertainty remains around valuations, especially for private equity buyers. The terminal value is a key question, particularly for private equity buyers, who must consider how the price relates to the initial investment.