Greetings,

It's a great time to be a tech company looking for a buyer. A new report predicts that bigger companies' need to quickly acquire new technology will drive a strong rise in M&A activity through the second half of the year. More on that below.

Also in this edition:

• Trump appeals order for IEEPA tariff refunds
• Firms set AI usage limits for cost management
• ADP: Private payrolls add 122K jobs in May
• Alphabet's $80B fundraising highlights AI investment needs

EY-Parthenon forecasts an 8% increase in US merger and acquisition activity by the end of 2026, driven by corporations' need to acquire new technologies quickly. The report projects an 11% rise in strategic acquisitions by corporations, while private equity activity is expected to remain flat.

The Trump administration has appealed a judge's order for Customs to refund $166 billion in tariffs deemed unlawful by the Supreme Court. The Justice Department argues that Judge Richard Eaton lacks the authority to mandate refunds for importers who haven't sued. The DOJ has also appealed Eaton's directive calling for Customs and Border Protection Commissioner Rodney Scott to testify. The case is headed to the US Court of Appeals for the Federal Circuit.

Employers added 122,000 jobs to private payrolls last month, above the Dow Jones consensus estimate and up from the tally of 105,000 in April, according to ADP. Eight of the 10 sectors in the survey posted gains.

A shakeout is looming in credit markets for leveraged deals made during the low-interest period of 2020 and 2021, according to experts at the Bloomberg Global Credit Forum. Holly Kim of Glendon Capital Management highlighted a "day of reckoning" for cable and broadband providers with $230 billion in debt, while Suzanne Gibbons of Davidson Kempner noted that some capital structures from that era "don't make sense today." Investors are showing less interest in liability management exercises, with some preferring bankruptcy as a solution.

Companies are balancing the push for employees to use artificial intelligence with the need to manage costs, with Walmart capping the use of an in-house AI agent and Uber Technologies limiting monthly spending on certain AI coding tools to $1,500 per tool. Uber has already exceeded its annual budget for Claude Code from Anthropic.

The US Attorney's Office for the Southern District of New York is scrutinizing valuation discrepancies in the private credit market, focusing on differences in asset marking. US Attorney Jay Clayton highlighted this issue at the Bloomberg Global Credit Forum, citing cases such as First Brands Group and Tricolor Holdings. Although Clayton acknowledged the benefits of private credit to the economy, he emphasized the need for transparency and has directed his team to investigate potential irregularities.

Alphabet has raised $80 billion through a stock-based fundraising effort, matching the amount SpaceX is expected to raise in its IPO. The funds will be used to invest in artificial intelligence, highlighting the significant capital requirements for AI development. This move demonstrates the advantage public companies have in raising large sums quickly without affecting stock prices.