Dealmakers have spent the past week looking at two signals that point in different directions. Mergers and acquisitions cooled sharply in the third quarter, and several high-profile share sales have been shelved. Yet totals for the year remain unusually high, and US stocks sit near record levels.

The picture is less a collapse than a repricing of risk, and the evidence so far supports that reading better than a crisis narrative.

Deals cooled, but the year is still strong

Global M&A totalled $993 billion in the third quarter, down 41% from the second quarter, according to LSEG data reported by Reuters on October 1. It was the first quarter below $1 trillion since the second quarter of 2025. There were 10 deals above $10 billion, the fewest in a quarter since late 2024.

Over nine months, the picture looks different. LSEG put year-to-date deal value at $3.9 trillion, up 28% and the highest for the period since 2001. Mergermarket, which counts differently, reported $4.44 trillion, up 27%, the second-strongest first nine months on record. Deal counts are falling, though. LSEG said volume by number of deals is down 8%, the lowest since 2020.

In other words, fewer but bigger deals have inflated the totals, and the pace has slowed since the record first half. Mergermarket said more than 72% of the nine-month volume arrived in the first six months.

Why borrowing costs matter

Reuters tied the slowdown to rising borrowing costs. The 10-year US Treasury yield reached 5.34% on October 1, its highest since 2002, and Forbes reported it above 5.35% on October 7. Higher yields raise the cost of financing acquisitions and lower what buyers are willing to pay.

Morgan Stanley's John Collins told Reuters that higher yields make valuations "a little tougher" at the margins. Clifford Chance's Sarah Jones described the quarter as a normalisation, not the end of a cycle. JPMorgan's Charlie Bouckaert said structural trends such as AI should keep activity strong, and that 2027 should be another robust year. These are views, not forecasts that have been tested.

The IPO side

Public listings have been hit more visibly. A Reuters factbox on October 9 listed nine high-profile offerings delayed, shelved or withdrawn this year. They include:

  • Firmus: withdrew its ASX listing this month.
  • Oura: postponed a US IPO in September, in which it sought to raise up to $2.2 billion.
  • Holtec Nuclear: withdrew its US IPO in September.
  • KNDS: put its listing on hold in July.
  • PhonePe: paused its plans in March.

Reasons given were mostly market volatility and uncertain conditions. Reuters did not state reasons for some, so it is not possible to say every case reflects the same pressure.

What Firmus shows, and what it does not

Firmus is the most useful case because the reasons were unusually specific. Reuters reported that the IPO price implied an equity valuation of about $30.6 billion, nearly triple an August funding round. ABC News said it would have been the biggest Australian IPO since Telstra in 1997. Investors worried about heavy debt, a limited record and the structure of the offer.

Reliance Investment Research's Philip Wool told ABC the company "ran into a wall of AI anxiety". That is one analyst's view. Ten Cap's Jun Bei Liu argued the valuation was too high from the start, which points to a company-specific problem as much as a market one.

Airtel Money's London debut shows the other side. It raised about $703 million and was heavily oversubscribed, but traded roughly 1.5% below its offer price on the first day, according to Reuters. Demand existed, yet buyers were not willing to pay more.

Reading the signals

Three points argue against reading too much into the slowdown.

First, IPO proceeds this year are about $215 billion excluding SPACs, the highest since 2021, according to LSEG. Nine-month deal totals remain historically high. Third, ABC reported the Nasdaq was up 43% over the past year and at record highs.

The signs of strain are narrower and more specific. Capital-intensive and heavily indebted companies seem to be struggling most. Mergermarket's Lucinda Guthrie said the open question is whether uncertainty about growth, geopolitics and financing conditions will stop deals from closing.

What to watch next

Four things will show whether this is a pause or something larger:

  • Whether the 10-year yield stabilises or keeps rising.
  • Whether postponed listings return in the fourth quarter or slip into 2027.
  • Whether M&A rebounds as deals already in the pipeline close.
  • Whether investors continue paying up for companies with proven profits while turning away from those without them.

If those hold, the market looks selective, not weak.

Corrections and updates

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