Axios Pro Rata: Slowdown

1. Key Themes

M&A Activity Is Sharply Contracting After a Record-Setting Run

Global dealmaking is falling off a cliff after six consecutive quarters above $1 trillion, with the U.S. leading the decline.

• "Q3 global M&A volume and deal count are down 49% and 39%, respectively, from Q2. The year-over-year totals are down 26% and 41%, respectively."
• "The U.S. deal dropoff is even more severe, with M&A volume off 61% quarter-over-quarter and deal count down 46.5%."

Megadeals Are Vanishing, Not Just Slowing

The slowdown isn't evenly distributed — it's concentrated in the largest transactions that had been propping up headline totals.

• "There's been a significant decline in megadeals, which had been inflating the headline numbers... So far this quarter there only have been nine deals valued at $10 billion or more, compared to 27 such deals last quarter."

Macro Uncertainty Is Freezing Buyer Confidence

A confluence of macro pressures is making acquirers hesitate more than in prior slowdowns.

• "Choose your own albatross: High oil prices, stubborn inflation, (correct) expectations of interest rate hikes, lingering SaaSpocalypse fears trickling into other sectors."
• "'This seems more dramatic than other pauses we've seen,' says Matthew Toole, director of deals intelligence for LSEG. 'The macro issues are probably causing some buyers to question their models.'"

AI Infrastructure and AI-Native Startups Still Command Massive Capital

Despite the broader M&A freeze, venture financing into AI compute, labs, and applications remains robust and large-scale.

• "Crusoe... raised $3.9b at a $30.9b post-money valuation."
• "Emulate, a British AI lab led by ex-DeepMind researchers, is raising up to $700m at a $3b pre-money valuation."
• "ElevenLabs, an AI audio startup, is raising more than $500m in Series E funding."

2. Contrarian Perspectives

This Slowdown May Be More Structural Than Cyclical

While M&A pauses are normal, the deals intelligence lead at LSEG suggests this one reflects deeper business-model doubt rather than typical seasonal or cyclical caution.

• "'This seems more dramatic than other pauses we've seen,' says Matthew Toole... 'The macro issues are probably causing some buyers to question their models.'"
• This implies the contraction isn't just about financing costs, but about acquirers genuinely re-underwriting whether target business models still work — a more fundamental repricing than a typical rate-driven pause.

3. Companies Identified

• Berkshire Hathaway — Conglomerate holding company. Mentioned as the site of Warren Buffett's historic step-down as chairman after 60+ years. "Warren Buffett today stepped down as chairman of Berkshire Hathaway, after more than six decades."
• Crusoe — Denver-based data center developer. Raised $3.9b at a $30.9b valuation while exploring an IPO, signaling continued mega-scale capital appetite for AI infrastructure. "raised $3.9b at a $30.9b post-money valuation led by Atreides Management, Mubadala Capital, and Valor Equity Partners."
• Emulate — British AI lab founded by ex-DeepMind researchers. Raising up to $700m, reflecting continued frontier AI lab investment. "raising up to $700m at a $3b pre-money valuation led by Index Ventures and Lightspeed."
• Angle Health — SF-based health-care benefits platform. Raised $600m combining primary and tender capital, showing liquidity-focused late-stage structuring. "raised $600m at a $2.7b valuation. It includes $200m in Series C primary capital and a $400m tender."
• ElevenLabs — AI audio startup. Large late-stage raise underscoring continued AI application-layer enthusiasm. "raising more than $500m in Series E funding."
• Vital Farms — Austin-based pasture-raised egg producer. Case study in competitive erosion after a supply-driven boom; explored strategic alternatives after a huge value decline. "The result was nearly an 80% market cap decline for Vital."
• Revolut — Fintech valued at $75b by VCs, now planning a public listing, illustrating a major late-stage private company's path to liquidity. "valued by VCs at $75b, is planning a dual listing in London and New York."
• Electra Therapeutics — SF-based immunology/cancer biotech. Notable IPO priced above range, suggesting selective public market appetite for biotech despite the broader slowdown. "raised $350m in its IPO. It priced 23.3m shares at $15, versus plans to offer 21.67m shares at $14-$16, for a $1b fully diluted value."

4. People Identified

• Warren Buffett — Longtime Berkshire Hathaway chairman/CEO. Mentioned for stepping down as chairman after over six decades, marking the symbolic end of an era. "Father Time always wins. He has, however, been generous with me... The company is in excellent hands, and I look forward to remaining a shareholder alongside you."
• Matthew Toole — Director of deals intelligence at LSEG. Cited as the analytical voice explaining why this M&A slowdown feels different. "This seems more dramatic than other pauses we've seen... The macro issues are probably causing some buyers to question their models."
• Adam Bain & Dick Costolo — Twitter veterans now running venture firm 01 Advisors. Mentioned for raising a large fourth fund. "01 Advisors, the VC firm led by Twitter vets Adam Bain and Dick Costolo, is raising up to $395m for its fourth fund."

5. Operating Insights

• Expect deal timelines and valuations to compress industry-wide, not just in "hot" sectors. The pullback is broad-based across deal count and dollar volume in both the U.S. and globally, meaning founders and dealmakers should recalibrate exit expectations even outside of tech: "Q3 is shaping up to break a streak of six straight quarters with at least $1 trillion in global M&A activity."
• Late-stage private companies are increasingly using tender offers alongside primary rounds to deliver liquidity without forcing a full exit — a structuring tactic worth emulating amid the M&A/IPO freeze, as seen in Angle Health's raise: "It includes $200m in Series C primary capital and a $400m tender."
• Even category leaders are vulnerable to fast-follow competition eroding differentiation — Vital Farms' pasture-raised egg premium eroded once competitors scaled comparable supply in response to a shortage: "other companies amped up production on both standard eggs and those from pasture-raised hens, driving up competition."

6. Overlooked Insights

• A wave of debt-heavy financing structures may be re-emerging for growth-stage companies, as seen in Nex's $150m raise being "split around 50/50" between equity and debt with a new credit facility from JPMorgan — suggesting late-stage startups are increasingly blending debt into growth capital stacks as pure-equity valuations get harder to justify.
• Regulatory friction is quietly reshaping large media and gaming deals: the FCC's approval of foreign financing above 25% for Paramount Skydance's Warner Bros. Discovery deal, and the FTC's additional information request on Fertitta's $5.7b Caesars acquisition, both hint at increased scrutiny that could slow even well-capitalized strategic M&A going forward.