Deal Momentum Entering 2026 Remains Strong
Following a record-breaking 2025 — the most active year for US M&A since 2021 — deal momentum has carried into early 2026. US M&A activity totaled approximately $682B through Q1 2026, up 39% YoY, marking the second-highest first-quarter volume in the past four years and underscoring continued deal resilience. Strategic acquirors drove the majority of activity, accounting for approximately 74% of total deal value, while mega-deals continued to influence aggregate volumes. While macro and geopolitical volatility persist, a constructive financing backdrop and strong corporate balance sheets are supporting continued engagement.
While Rate Uncertainty Persists, CEO Confidence Remains Steady
Markets entered 2026 with expectations for further rate relief, though volatility has driven a repricing toward a flatter policy path. Following three Federal Reserve rate cuts in late 2025, lack of clarity around the timing and magnitude of future easing continues. Inflation remains slightly above the Fed’s long-term target, and labor market indicators point to gradual softening. Despite these dynamics, CEO confidence rebounded in Q1 2026, recovering from a three-year low as tariff-related uncertainty has begun to fade, supporting renewed boardroom activity and measured optimism around strategic M&A.
Private Capital Remains Active as Dynamics Evolve
Private capital continues to shape the financing landscape. Despite public market volatility, private credit deployment remains active. Though conditions have tightened amid more complex underwriting, rising redemption pressure, and weaker performance in select sectors. These dynamics are influencing transaction structures and encouraging discipline rather than accelerating activity uniformly.
Deployment Pressure Builds as Sponsors Grow More Selective
After a strong rebound in 2025, US private equity deal volume slowed in Q1 2026, down 51% QoQ, reflecting increased underwriting discipline amid continued valuation gaps between buyers and sellers. While overall dry powder remains near $2T, slower fundraising and extended hold periods are contributing to more selective sponsor deployment. As a result, sponsor activity is increasingly concentrated in high-conviction opportunities with clear operational or strategic upside.
Corporates Prioritize AI, Scale, and Core Capabilities
Strategic acquirors continue to represent a significant share of M&A activity. They remain supported by strong balance sheets and a sustained emphasis on scaling core capabilities. Activity has rebounded from 2022 lows and remains focused on targeted strategic priorities, including AI and technology enablement, in-sector consolidation to drive scale and efficiency, and disciplined capital deployment into assets with clear strategic fit and integration visibility. While corporates remain active on the buy-side, divestiture activity has been more episodic, with periods of elevated large-scale asset sales interspersed with more selective portfolio optimization as companies refine their focus around core businesses.
Regulatory Environment Improves, While Tariff and Geopolitical Risks Linger
Regulatory conditions continue to ease, supporting larger and more complex transactions. The FTC is increasingly emphasizing divestitures and targeted structural remedies over outright deal blocks, which is making in-sector combinations more attractive. Uncertainty surrounding tariffs and broader geopolitical risks — including developments in early 2026 — remains a key watchpoint for dealmakers.
Sources
- Dealogic; announced US M&A transactions involving US targets. Data as of March 31, 2026.
- FRED Economic Data – St. Louis Fed.
- The Conference Board Measure of CEO Confidence in collaboration with The Business Council.
- Capital IQ dry powder data as of March 31, 2026.
- FactSet take-private volume data as of January 2, 2026.
- PitchBook / LCD private credit and financing data.
- FTC Legal Library early termination requests.