By Marc Cooper
Entering 2025, the M&A market embraced post-election optimism that pro-business policies, lighter regulation and lower taxes would finally unlock a long-awaited dealmaking rebound. It looked as if the dam might finally break.
Then reality intervened. An array of potential US tariffs introduced a familiar financial-market foe: uncertainty. It wasn’t the existence of tariffs alone that slowed activity—it was the inability of boards and investors to underwrite around a moving target.
Private equity-backed, mid-market deals, in particular, were put on hold. Large-cap strategic investors, less exposed to tariff volatility and supported by strong balance sheets, moved forward. Once again, we were looking at a split-screen market.
As the year progressed, some of that fog lifted. The policy backdrop steadied. Interest rates began their long-anticipated decline. Confidence—the most fragile ingredient in any deal cycle—started to return.
The second half of 2025 was meaningfully stronger than the first, with a broader set of participants leaning back in. As the year draws to a close, US M&A activity is up approximately 50% year-over-year.
But this has not been a full-spectrum, feel-good rally. It has been a highly selective one, skewed toward strategic, large-cap companies. Deals valued at $5 billion and up accounted for more than half of all deal volume. That distinction matters.
Top-tier assets—companies with strong earnings, visible growth and sensible leverage—likely will continue changing hands at robust valuations. The harder part of the market lives elsewhere: in companies with operational challenges, uneven trajectories or balance sheets built for a different rate regime. Those businesses are not going to trade simply because sentiment has improved. There has been no shortage of financial-market commentary about “pent-up supply” in private equity and the prospect of a sudden wave of forced selling. I remain skeptical of that market narrative.
A significant chunk of these holdings sit in the portfolios of so-called zombie funds—firms that are unlikely to raise another pool of capital. Their motivation to sell is limited. They can, and often do, continue to hold and harvest.
The real pressure to sell lies with financial sponsors that are still in the fundraising business. For them, time, lower rates and more realistic price expectations still have to fall into place.
That’s why 2026 looks less like a surge and more like a grind higher. Lower financing costs will offer some multiple expansion. Continued earnings growth will add another element of value. Together, those forces should narrow the bid-ask gap. But the sequence will likely be “best assets first,” not a wholesale clearing event. In my view, any broad-based capitulation on price will be measured, not dramatic.
In that kind of market, the nature of M&A advice changes. When conditions are frictionless, execution dominates. When they are uneven, judgment does. Buyers and sellers don’t just need intermediaries; they need a grounded read on value, timing and risk—even when that message isn’t what they hoped to hear.
Often the most constructive advice is restraint: don’t force a process, don’t chase inflated expectations, don’t confuse optimism with market reality. Telling clients what they want to hear may win an engagement. Telling them what they need to hear tends to win a relationship.
Looking ahead to 2026, I am cautiously optimistic. Strategic buyers remain well capitalized. Private equity has dry powder but remains disciplined. Financing conditions are improving. Boards, after several years of macro and geopolitical disruption, are becoming more willing to lean back into transformational decisions. At the same time, there is growing recognition that waiting for “perfect” conditions is itself a strategic risk.
The next phase of this cycle will not reward speed alone. It will reward discipline, precision and trust. The M&A market may feel healthier in 2026 than it does today, but it will not be simpler. In complex markets, judgment is the ultimate differentiator—and that is where we intend to continue to earn our place. For Solomon Partners, the opportunity is both cyclical and structural. With more than 200 bankers across 13 industries, we sit in a distinctive position in the advisory market: deep sector expertise paired with a partnership model that still offers real ownership and opportunity.
