March 7, 2025 - The new administration has promised sweeping deregulation. While the president often frames such bureaucratic cutbacks regarding how they will affect household savings, most regulations govern commerce. They will affect businesses first.

Executives are wondering how sweeping the changes will be. Will they succeed? And what effect will they have on mergers and acquisitions (M&A)?

According to the U.S. government, 180,000 pages of Federal Regulations have only ever grown with modest periodic cuts. The president’s last administration did not appreciably reduce that number. However, as we will explore, page count may matter much less than the particular page cut.

In this article, we consider the specific regulatory bodies and policies the administration might roll back and how we might expect M&A activity to be impacted.

The Targets of Deregulation

When the president talks about deregulation in his first term, he is likely referring to Executive Order 13,771, titled, “Reducing Regulation and Controlling Regulatory Costs.” The order required all government agencies to eliminate two rules or guidance documents for every new “significant regulatory action” and for the net cost of all new regulations to be zero.

The Biden administration repealed Executive Order 13,771. Now it is back via the new executive order “Unleashing Prosperity Through Deregulation.” This time, the ratio for cuts has increased to 10-1, repeal to enact.

Again, it orders heads of agencies to propose regulations for appeal, calculate the costs of regulation, submit regulation costs to the Director of the Office of Management and Budget, and ensure that net regulatory costs are “significantly less than zero.”

The administration is also likely to replace the heads of agencies with officials sympathetic to the president’s deregulatory aims. We expect this deregulatory effort to affect those agencies with the most publicly notable regulations affecting commerce, including:

• Department of Energy
• Environmental Protection Agency
• Department of the Interior
• Department of Transportation
• Department of Commerce
• Department of Agriculture
• Small Business Administration
• U.S. Department of Health and Human Services
• U.S. Department of Justice

This could result in:

• Reduced certification and reporting requirements
• Reduced environmental protection
• More drilling and oil production
• Less antitrust action
• Reduced healthcare protections
• Reduced diversity programs

For example, the president’s prior administration rolled back a reported 100 environmental regulations, including but not limited to, those meant to limit emissions from passenger vehicles and protect wetlands. Restrictions for power plants were eased as well. The president downgraded several parks from national monument status, allowed more offshore drilling, and attempted to repeal healthcare regulations.

Will the deregulation that occurs during this second Trump Administration result in a more business-friendly M&A environment?

The private equity industry believes so. Firms are buoyant and leveraged at their highest levels since 2010. Though the first Trump administration was as active in challenging large mergers as the administration that succeeded it, the 2017 tax cuts act freed up capital and led to more M&A.

Although the administration is primarily focused on deregulation, even more regulatory enforcement might create M&A. If the Trump administration pursues large tech companies, banks, or utilities and forces them to spin off businesses, this too may create M&A opportunities.

Still, Deregulation Will Face Challenges

Many of the president's proposed changes may run into legal challenges. During the Obama administration, the Supreme Court ruled to limit the power of agencies in the case West Virginia v. EPA. This established that agencies cannot act beyond the powers vested in them by Congress. Litigants are likely to use this to argue that the president has no authority to make sweeping changes.

In addition, some laws that the president may want to target cannot be rescinded by executive order, such as the Energy Policy Act of 1992, the National Climate Program Act, the Nuclear Waste Policy Act of 1982, and others.

During the last administration, it seemed the government machinery was not so easy to change. Though the last Trump administration made far fewer new rules than prior administrations, it did not appreciably reduce the sum of regulations or pages of regulation.

According to The Legal Review, “Rather than cutting the Code by 25,000 pages, the Administration increased it by about 1,500 pages. The Administration took three regulatory actions for every deregulatory one.”

As we have covered above, those acts of deregulation were sometimes sweeping and notable. While it is difficult to characterize the entire M&A market during the president’s prior term, some analysis suggests dealmaking was up 11% in 2017, buoyed by the perception that the administration was friendly to transactions.

If Deregulation Comes to Pass, We Expect M&A Will Boom

Less regulation will likely increase M&A. Private Equity will likely be far more active, and a stronger dollar and lower taxes will encourage more inorganic growth among companies. There will likely be more appetite for doing deals and fewer barriers to doing them.

Citrin Cooperman’s Financial Services Industry Practice is here to discuss the implications of M&A transactions in 2025 and beyond. Please contact your Citrin Cooperman representative.