Illiquid Insights
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Private markets are entering the year on firmer footing, following a strong finish to 2025.
The beginning of 2025 was marked by trade uncertainty, higher rates, and soft demand weighing on markets.
But the narrative shifted dramatically in the second half of the year. A surge in M&A activity fueled the strongest year for private equity deal value since 2021.
An M&A Upswing
2025 was the year of mega-deals.
M&A transaction value increased sharply throughout the year, while deal count grew more modestly.
In this rebound, mega-deals over $5 billion accounted for roughly 75% of total M&A value growth.
Key drivers of this growth included:
The AI Frontier: Tech M&A led the charge, growing 76% year-over-year as firms raced to acquire and consolidate AI capabilities
Strategic Transformation: Corporate buyers pursued large-scale, transformational acquisitions
Macro Tailwinds: Stabilizing rates and a shifting regulatory landscape encouraged acquirers to finally move off the sidelines
What It Means for 2026
The pickup in M&A provides some sorely needed relief for the private markets.
Since 2022, sponsors and lenders have struggled with an exit bottleneck. Through this, higher rates and volatile markets sharply reduced distributions and impacted new fundraising.
As we move into 2026, the “velocity of exits” will be key. If the M&A momentum is maintained, expect meaningful improvement in deal activity and liquidity across the private equity and credit landscapes.
Further Reading
Check out Bain & Company’s take on the M&A Rebound.
Their 2025 M&A report reinforces what the data shows: companies are regaining confidence, and deal backlogs are moving again.
For a more in-depth perspective on why and how M&A is recovering, the article is well worth the read.
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