What’s Driving the Surge in Deal-Making?

Episode Summary

Executive Summary: Goldman Sachs M&A chief Stefan Feldgois says 2025 became one of the most active deal years in history despite tariffs, geopolitical risk, and a U.S. shutdown because strategic imperatives, ample public/private capital, and improving financing/receptivity let long-dormant deals get done. He expects 2026 to stay near peak levels unless geopolitics, credit stress, or other shocks disrupt the market.

Main Topics: 2025 M&A resurgence despite macro headwinds (Priority: 5/5): Deal activity accelerated from a quiet Q1 and post-Liberation Day slowdown into a surge in the last several months, rivaling 2021 levels and making 2025 one of the most active years on record. Why strategic dealmaking returned (Priority: 5/5): Boards and CEOs are revisiting delayed strategic actions, driven by long-term repositioning needs, shareholder pressure, and the growing ability to finance and execute transactions. Mega-deals and financing conditions (Priority: 5/5): Large transactions rebounded as capital markets reopened, private and public credit improved, and IPO windows became more supportive, enabling complex and large-scale deals to close. AI’s impact on M&A strategy (Priority: 5/5): AI is reshaping boardroom decision-making and fueling consolidation across AI-adjacent sectors such as software, data centers, semiconductors, real estate, and power supply, as companies seek scale and optionality. Simplification, portfolio reshaping, and activism (Priority: 4/5): Companies continue to spin off or realign businesses to unlock value, while activism and more vocal institutional investors reinforce the pressure to simplify portfolios. Private equity and private capital recovery (Priority: 4/5): Private equity remains a major share of the market and is mid-recovery, with improving monetization, continued fundraising, and broader participation from sovereign funds, family offices, and private credit providers. 2026 outlook and risks (Priority: 5/5): Feldgois is cautiously bullish for 2026, expecting activity to remain strong if capital access, strategic urgency, and private equity recovery continue, but warns that geopolitics, credit tightening, and idiosyncratic shocks could derail momentum.

Key Arguments: M&A activity recovered strongly in the second half of 2025 after an unusually quiet start, indicating that strategic demand had been delayed rather than eliminated. The market is being driven less by short-term cycles and more by long-term corporate repositioning, especially after post-COVID strategic reassessments. Large transactions returned because financing, regulation, and seller/buyer conditions finally aligned, especially in the second half of 2025. AI is a major strategic uncertainty: boards lack deep experience, so they are using M&A to gain scale, flexibility, and exposure across multiple AI-related scenarios. Portfolio simplification is persistent because conglomerate discounts remain and shareholders increasingly push for breakups or asset sales. Private equity is still a large force in M&A and is expected to contribute more as portfolio monetizations improve and private capital broadens. The current environment is not fully “satiated”; deal pipelines remain healthy, with new mandates still running at elevated levels, suggesting continued activity into 2026.

Data Points: $10 billion transactions in 2025 vs. 2024: Up 100% - Goldman Sachs’s Feldgois said mega-deal volume doubled year over year. Transactions $500 million and up: Up 20% to 30% in total - He said larger mid-market and upper-end deals increased substantially in 2025. Private equity share of M&A market: 30% to 40% - He estimated PE remains a major share of overall M&A activity. Peak private equity share: Closer to 40%, maybe a bit over 40% - At market peaks, PE’s share rises toward the upper end of the range. New mandates / checks: Running at 2021 levels or higher - Forward indicator that the pipeline remains strong heading into 2026. Podcast recording date: Thursday, November 20, 2025 - The episode was recorded near year-end, framing the 2026 outlook. Historical benchmark year: 2021 - Used repeatedly as the comparison for the most active M&A environment Feldgois had seen.

Pivotal Quotes: "The last quarter, the last three, four months, have rivaled 2021." — Stefan Feldgois: Describing how 2025 deal activity accelerated sharply in the second half of the year. "AI is completely new." — Stefan Feldgois: Explaining why boardroom decision-making is unusually difficult and why AI is influencing strategic M&A choices. "If there’s something that makes long-term strategic sense, you should be at least looking at it." — Stefan Feldgois: Summarizing the shareholder and board mindset behind renewed dealmaking.

Implications: M&A appears structurally supported into 2026 by capital availability, strategic repositioning, AI-related transformation, and private equity recovery. But the market remains sensitive to geopolitical shocks and credit tightening.