2026 Outlook For Dealmaking

Key Concepts

• Dealmaking Momentum: The continuation of merger and acquisition (M&A) activity despite potential economic headwinds.
• AI Investment Driver: The increasing need for companies to invest in Artificial Intelligence as a key factor fueling dealmaking.
• Regulatory Environment: The impact of the Federal Trade Commission (FTC) and Department of Justice (DOJ) scrutiny on M&A activity.
• Geopolitical Influence: The role of international political factors, such as trade tensions and competition, in shaping deal structures.
• Valuation & Portfolio Assessment: The importance of company valuations and strategic portfolio positioning in driving M&A decisions.
• Counter-Cyclical Dealmaking: The potential for increased M&A activity during economic downturns as companies seek to acquire struggling competitors.

Continued Dealmaking Momentum & Key Drivers

The discussion centers around the surprising continuation of dealmaking momentum despite expectations of a slowdown. Multiple factors are cited as contributing to this trend, with CFOs and advisors indicating they anticipate this activity to persist into the coming year. A primary driver is the increasing need for companies to invest in Artificial Intelligence (AI) technologies to enhance their businesses. This demand for AI capabilities is prompting acquisitions and partnerships to gain access to necessary expertise and resources.

Furthermore, a “softer regulatory stance” in the U.S. is playing a role. Specifically, there has been a reduction in the number of deals challenged by the Federal Trade Commission (FTC) and the Department of Justice (DOJ), creating a more favorable environment for M&A. The prospect of lower financing costs is also identified as a contributing factor.

Geopolitical Factors & Cross-Border Deals

Initial expectations predicted that geopolitical tensions – including tariffs and the policies of the previous U.S. administration – would significantly hinder cross-border dealmaking. However, this did not materialize. In fact, geopolitical considerations motivated some deals.

A specific example provided is the merger of the satellite businesses of TALOS, Airbus, and Leonardo in France. This merger was explicitly driven by the need to create a stronger competitor against U.S. companies, demonstrating how geopolitical competition can directly stimulate M&A activity. The speaker acknowledges that the future impact of trade remains a “wildcard,” but it hasn’t proven to be the deterrent previously anticipated.

Valuation, Portfolio Strategy & Economic Conditions

The conversation shifts to the factors influencing individual deal decisions. While valuations have decreased from the peaks of 2021 and 2022, they are higher than the previous year. Valuation remains a consideration, but it’s not the sole determinant. Companies are also evaluating their existing portfolios and assessing whether they are adequately positioned for the current market.

The discussion highlights that some companies view the present environment as an opportune time to pursue deals. Even the possibility of a recession in the coming year isn’t necessarily expected to halt dealmaking. Instead, a weaker economy could create opportunities for companies to acquire struggling competitors, a concept referred to as counter-cyclical dealmaking. As stated, “if you are facing a weaker economy, it might be that some of your competitors might not be doing well anymore. And you it's a good opportunity to buy.”

Deal Types & Data Sources

The conversation briefly touches upon the breadth of deal types occurring, extending beyond traditional mergers and acquisitions to include Initial Public Offerings (IPOs), partnerships, and licensing agreements. Examples mentioned include deals in the railroad sector, as well as activity involving Footlocker and Dick's Sporting Goods. The speaker references a platform ("the function") where deal information can be tracked, including IPOs.

Logical Connections & Synthesis

The discussion flows logically from an initial observation of continued dealmaking momentum to an exploration of the underlying drivers. It then examines the influence of external factors like geopolitics and economic conditions, and finally delves into the internal considerations driving individual company decisions. The key takeaway is that a confluence of factors – AI investment, a more lenient regulatory environment, geopolitical competition, and strategic portfolio considerations – are collectively supporting continued M&A activity, even in the face of economic uncertainty. The potential for counter-cyclical dealmaking suggests that a recession, rather than suppressing activity, could even increase it.