Global M&A stays strong in 2026 despite tightest capital squeeze in 30 years

The global mergers and acquisitions boom that defined 2025 is carrying over into 2026 as companies reassess their portfolios and AI-driven demand fuels large-scale transactions. But the tightening pool of capital is forcing managers to be more selective than ever.

Despite a slow start when Trump’s sweeping tariffs early last year briefly canceled acquisitions and new IPOs, the total value of deal-making activity has risen nearly 40% to $4.9 trillion in 2025, a record high, according to private market intelligence firm Pitchbook.

PitchBook said it surpassed the previous high of $4.86 trillion set in 2021 as the number of deals and value activity hit records. Activity accelerated as central banks lowered interest rates, valuations improved and companies increased their spending on artificial intelligence.

Markets believe the rally will continue as Wall Street regains its appetite for big deals on expectations that borrowing costs will fall.

A Bain & Company survey of 300 M&A executives found that 80% expect to maintain or increase deal activity this year, citing improving macroeconomic conditions and a growing backlog of private equity and venture capital assets awaiting exit.

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

“As sudden changes in trade policies settled into a less threatening pattern of change, relief turned to confidence and then fear of missing out,” said Jake Henry, global co-chair of McKinsey’s M&A Practice.

At the heart of this shift are companies’ determined efforts to reassess their portfolios, as geopolitical risks, economic fragmentation and uneven global growth force boards to rethink where they operate and the risks they are willing to take.

“Leaders across industries recognize that many traditional business models have reached the limits of their historical growth engines,” said Suzanne Kumar, vice president of Bain’s global mergers and acquisitions and divestitures practice.

“Companies urgently need to reinvent themselves to stay ahead of the great forces of technology disruption, the post-globalization economy and shifting profit pools,” Kumar added.

Goldman ranked first in global mergers and acquisitions rankings Last year, he advised on nearly 40 deals worth a combined $1.48 trillion. It was the period when mega deals were at their strongest in terms of volume. ReutersHe cites LSEG recordings dating back to 1980.

Still, companies are being cautious. Boston Consulting Group’s M&A sentiment index has risen to 75 from its low at the end of 2022 but remains well below the long-term average of 100, reflecting an “improving but cautious stance.” A higher value compared to the previous month indicates that momentum in the M&A market is accelerating, while a lower value indicates it is slowing down.

While the appetite for deals remains strong, the discretionary capital pool to finance them is historically weak, forcing managers to pursue only transactions that generate net returns.

The proportion of capital allocated to mergers and acquisitions reached its lowest level in 30 years in 2025, according to Bain, as companies allocate more cash to dividends, buybacks, capital expenditures, as well as research and development.

“Managers need to test whether M&A avenues and specific deals will help the company better compete in the most attractive markets… they need to rethink portfolio boundaries and make bigger, bolder decisions about what capabilities and access they should have,” Kumar said.

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

Financing shortages have pushed private equity into the center of deal-making. Private equity firms are looking for ways to deploy idle cash, borrowers are turning to private loan funds for flexibility, and sovereign wealth funds are increasingly acting as lead investors rather than passive backers.

Private equity now accounts for about 40% of global M&A activity, according to Goldman. On the contrary Seizing signs of stress in the private credit market, currently worth 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.

Number of agreements exceeded $10 billion threshold Last year, that number rose to 60, the highest level since 2021, McKinsey’s Henry said.

With AI-related service providers fueling the “major deal fire” this year, Henry said, “We expect larger deals in 2026 with continued consolidation and geographic expansion.”

But PwC’s global deal industry leader Brian Levy said heavy capital spending on AI could constrain M&A activity in the short term.

As the adoption of artificial intelligence accelerates, the demand for computing power in digital infrastructure, energy, semiconductors and hardware optimization has also increased. In response, many companies choose to acquire rather than develop their technology stack.

Between the first quarter of 2024 and the third quarter of last year, capital expenditures by U.S. hyperscalers averaged $760 million per day, according to Goldman Sachs.

The Wall Street bank predicts another 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 being directed towards technology development and customization, as well as data centres, energy and other infrastructure,” Levy said.

“In the near term, the scale of this multitrillion-dollar investment could divert capital and negatively impact merger and acquisition activity.”