Global M&A to remain strong in 2026 despite severest capital squeeze in 30 years

The global M&A boom that defined 2025 continues into 2026, with companies rethinking their portfolios and artificial intelligence-driven demand driving large deals. But with capital pools tightening, executives are being forced to make choices more than ever.

After a slow start as President Trump’s sweeping tariffs at the beginning of last year temporarily halted acquisitions and new listings, deal value jumped nearly 40% in 2025 to reach a record $4.9 trillion, according to private market information firm PitchBook.

Pitchbook said deal volume and deal value activity reached record levels, surpassing the previous record high of $4.86 trillion set in 2021. Activity accelerated as central banks lowered interest rates, valuations improved and companies increased spending on artificial intelligence.

The market expects the rally to continue as Wall Street regains appetite for big trades amid expectations of lower borrowing costs.

A survey of 300 M&A executives conducted by Bain & Company found that 80% expect to maintain or increase deal activity this year, due to improved macroeconomic conditions and an increase in private equity and venture capital assets awaiting exits.

Based on an independent survey of 600 corporate and financial sponsor clients, Goldman Sachs found that 57% believe scale and strategic growth will be the main drivers of deal decisions this year.

“As the sudden shift in trade policy settled into a less threatening pattern of change, relief turned to confidence, then to fear of missing out,” said Jake Henry, global co-leader of McKinsey’s M&A practice.

Central to this shift is the critical push for companies to reevaluate their portfolios, as geopolitical risks, economic fragmentation, and uneven growth in the global economy force boards to rethink where they operate and the risks they are willing to take.

“Industry leaders are recognizing that many traditional business models have reached the limits of their historical growth engines,” said Suzanne Kumar, executive vice president of global M&A and divestitures at Bain.

“Companies urgently need to reinvent themselves to escape the great forces of technological disruption, the post-globalized economy and changing profit pools,” Kumar added.

Goldman topped global M&A rankings last year, advising on about 40 deals worth a total of $1.48 trillion. Citing LSEG’s records dating back to 1980, Reuters reported that this period was the strongest period for mega-trade volumes.

Still, companies remain cautious. Boston Consulting Group’s M&A Sentiment Index has rebounded to 75 from its lows in late 2022, but remains well below its long-term average of 100, reflecting an “improving but cautious stance.” A higher value than the previous month indicates that M&A market momentum is accelerating, while a lower value indicates a deceleration.

While the appetite for deals remains strong, the pool of discretionary capital to fund them has historically been thin, forcing management teams to pursue only deals with clear returns.

According to Bain, the proportion of capital allocated to M&A hit a 30-year low in 2025 as companies allocated more cash to dividends, stock buybacks, capital spending and research and development.

“Management teams must pressure test whether M&A paths and specific deals will help the company become more competitive in the most attractive markets. They need to rethink the boundaries of their portfolio and make bigger and bolder decisions about the capabilities they should own and access,” Kumar said.

“Disciplined reinvention and value creation are essential as competing capital demands raise the bar for deals,” he added.

The lack of funding has pushed private capital to the center of transactions. Private equity firms are looking to tap into idle capital, borrowers are turning to private credit funds for flexibility, and sovereign wealth funds are increasingly taking on the role of lead investors rather than passive backers.

Private equity currently accounts for about 40% of global M&A activity, according to Goldman. Despite signs of stress in the private credit market, currently valued at about $2.1 trillion, Goldman expects the asset class to more than double by 2030, expanding the pool of capital available to finance large transactions.

Industry reports say large-scale deals are fueling a resurgence in M&A, driven by AI-related demand.

Large deals worth more than $5 billion accounted for more than 73% of deal value growth in 2025, according to Bain.

The number of deals over the $10 billion threshold rose to 60 last year, the highest level since 2021, McKinsey’s Henry said.

Henry said AI-related service providers have fueled a “big deal fever” this year, and “we expect consolidation and geographic expansion to continue, with even more big deals coming in 2026.”

However, Brian Levy, global deals industry leader at PwC, said heavy capital spending on AI could dampen M&A activity in the short term.

As AI adoption accelerates, the demand for computing power in digital infrastructure, energy, semiconductors, and hardware optimization is skyrocketing. In response, many companies are choosing to acquire rather than build their entire technology stack.

From the first quarter of 2024 to the third quarter of last year, U.S. hyperscaler capital spending averaged $760 million per day, according to Goldman Sachs.

The Wall Street bank estimates that an additional 65 gigawatts of data center capacity will come online by 2030. This is more than double the amount added from 2019 to 2024.

“Investment in AI is going not just to technology development and customization, but also to data centers, energy and other infrastructure,” Levy said.

“In the short term, this multi-trillion dollar investment could divert capital and dampen M&A activity.”