With China’s turmoil causing disarray in global markets, deal makers in Asia are bracing for a rout.

Chinese stock losses this week exceed 15%, and Japanese stocks Tuesday registered their biggest drop in over two years. Falling stock markets hit mergers several ways: reducing what investors will pay for targets in the same sector; hurting buyers' stomach for risk; reducing the funds lenders make available for takeovers; and encouraging bidders to renegotiate or back out of deals, even at the cost of a "breakup" fee.