Goldman, Morgan Stanley See M&A Rebound in 2026
Top investment banks are forecasting a healthier deal market for 2026. Morgan Stanley analysts predict M&A activity will normalize relative to global GDP, while Goldman Sachs' CEO expects an "acceleration" in both M&A and IPOs, citing a robust pipeline of companies ready to transact.
The M&A market's resurgence in 2025 set the stage for 2026, with global deal value climbing by as much as 43% to $4.7 trillion, a figure 20% higher than the ten-year average. This rebound was top-heavy; deal values grew 36% while overall deal volume was nearly flat, pointing to a K-shaped market driven by a surge in megadeals. The number of transactions clearing the $10 billion mark swelled to 60 in 2025, the most since the 2021 peak. A primary catalyst for the optimistic 2026 forecast is the massive amount of uninvested capital held by private equity firms, often called "dry powder," which reached record levels of nearly $1.1 trillion to $1.7 trillion. PE firms face mounting pressure from their limited partners to deploy this capital and to exit from aging investments, as average hold times for portfolio companies have stretched to 6.2 years. This backlog is expected to drive a wave of both buying and selling activity. Artificial intelligence is a central driver of dealmaking strategy, compelling companies to acquire critical technology and infrastructure rather than building it internally. The energy sector is seeing a surge in M&A to support the immense power demands of data centers and AI, while the technology and healthcare sectors also continue to attract high deal volumes. In 2025, the Technology, Media, and Telecommunications (TMT) sector led all industries in aggregate deal value. Financing conditions have improved, with stabilized interest rates and stronger equity markets making stock a more attractive currency for deals. Alongside traditional banks, private credit funds are playing an increasingly important role in acquisition finance, offering more flexible structuring options for buyers. This competitive financing environment is expected to support momentum across a wide range of deal types in 2026. Due diligence is becoming more quantitative, moving beyond traditional financial statements to de-risk acquisitions. Acquirers now use data analytics to model revenue stability, assess customer concentration risk, and quantify potential synergies. This rigorous, data-driven approach allows dealmakers to transform abstract risks into calculated variables that can be priced into a deal.
