After two years of subdued activity, the global mergers and acquisitions market is showing meaningful signs of revival. Deal values in the first quarter of 2026 have exceeded the same period last year by 34%, driven by a combination of narrowing valuation gaps, improved financing conditions, and strategic imperatives that are pushing corporate boards to pursue transformational transactions. Investment bankers and corporate development teams report fuller pipelines than at any point since the 2021 boom, though the character of deals being pursued differs markedly from that earlier era.
The mechanics of the recovery are straightforward. During 2023 and 2024, buyers and sellers struggled to agree on prices as public market volatility made comparable valuations uncertain and rising interest rates increased the cost of deal financing. Many would-be acquirers paused their efforts, waiting for greater clarity. Sellers, particularly private equity firms holding portfolio companies, resisted accepting lower valuations than recent vintage transactions had achieved. This standoff resulted in the lowest M&A volume in a decade relative to economic output.
What has changed is a gradual recalibration of expectations on both sides. Sellers have acknowledged that 2021 valuations reflected a unique combination of low rates, abundant liquidity, and speculative enthusiasm that is unlikely to return. Buyers have become more comfortable underwriting deals in the current rate environment, adjusting their return expectations accordingly. The result is a market where transactions can clear—not at peak multiples, but at levels that make sense given current capital costs and growth outlooks.
Technology and healthcare continue to dominate M&A activity, though with different dynamics than in prior cycles. Technology deals increasingly involve AI-related capabilities, as acquirers seek to buy rather than build expertise in machine learning, large language models, and data infrastructure. Healthcare transactions are focused on services businesses, outsourced clinical operations, and healthcare IT, while pharmaceutical M&A remains constrained by drug pricing pressures and pipeline uncertainties. Industrial and energy sectors are also seeing increased activity as companies reposition for the energy transition.
Private equity remains a major driver of deal flow, though the composition of PE-backed transactions has shifted. Leveraged buyouts, which depend heavily on debt financing, have been replaced to some extent by add-on acquisitions to existing platform companies, where PE sponsors use equity rather than debt to fund growth. Take-private transactions of public companies have also increased as the gap between public and private valuations has narrowed. Several marquee deals in recent months have involved PE consortiums taking public companies private at premiums that attracted regulatory attention.
The financing environment, while improved from its tightest point, continues to influence deal structure. Broadly syndicated loans have become available again for most transactions, though spreads remain elevated relative to pre-2022 levels. Private credit has established itself as a permanent fixture of the deal financing ecosystem, competing for and winning mandates that would previously have gone to banks. For larger transactions, the return of high-yield bond issuance has reopened financing options that were effectively closed for much of the past two years.
Looking ahead, dealmakers see sustained activity through at least the first half of the year. The backlog of processes that were paused or abandoned during the downturn is working through the system. Strategic buyers sitting on substantial cash positions are facing pressure from boards and shareholders to deploy capital. And the looming possibility of regulatory changes following the next election cycle is motivating some deals to get done sooner rather than later. The M&A market may not return to 2021's frenzied pace, but it appears to have definitively emerged from its extended hibernation.