The numbers are staggering: Goldman Sachs analysts are forecasting global mergers and acquisitions activity could reach $3.9 trillion over the next twelve months—a figure that would represent the largest dealmaking wave since the technology boom of the late 1990s. After years of what bankers privately called the "deal desert," the floodgates have opened.

The evidence is everywhere. Global M&A volume surged 42% year-over-year in 2025, reaching $5.1 trillion. The fourth quarter alone saw landmark transactions that would have been unthinkable just two years ago: a $56.6 billion leveraged buyout of Electronic Arts by a sovereign-led consortium—the largest take-private in history—and a pending $85 billion merger between Union Pacific and Norfolk Southern that would reshape American rail transportation.

The Perfect Storm for Dealmaking

Three factors have converged to create what veteran investment bankers are calling the "Great Unlocking."

1. Rate Predictability Trumps Rate Level

The Federal Reserve's success in anchoring inflation has produced something dealmakers crave even more than low rates: predictability. With the federal funds rate stabilized in the 3.0% to 3.5% range and the Fed signaling a measured approach to further cuts, CFOs and private equity sponsors finally have the visibility they need to model long-term returns.

"It's not the absolute level of rates that matters—it's the confidence that those rates won't spike 200 basis points while you're integrating an acquisition. That predictability is the valuation floor boards need to approve multi-billion dollar premiums."

— Senior M&A banker at a major Wall Street firm

2. The $2.2 Trillion Powder Keg

Private equity firms have accumulated a mountain of uninvested capital—$2.2 trillion in so-called "dry powder"—that limited partners are increasingly impatient to see deployed. Fund managers who raised capital in 2021 and 2022 are now under pressure to put that money to work or risk losing future fundraising momentum.

This pressure is manifesting in larger checks and faster timelines. Buyout firms that might have spent six months on due diligence are now moving in six weeks, afraid that hesitation will mean losing deals to hungrier competitors.

3. Regulatory Winds Shifting

Perhaps most significantly, the regulatory climate has changed. The Federal Trade Commission's more permissive stance toward large combinations—a marked departure from the aggressive antitrust posture of recent years—has removed what had been a major obstacle to megadeals.

Deals that might have drawn multi-year antitrust reviews are now sailing through with minimal friction. For strategic acquirers who had put M&A plans on ice during the enforcement crackdown, the thaw is unmistakable.

Who's Winning the Dealmaking Renaissance

The primary beneficiaries of this M&A renaissance are the "bulge bracket" investment banks. Goldman Sachs, Morgan Stanley, and JPMorgan Chase are entering 2026 with their highest deal backlogs in three years, and their advisory fees are surging accordingly.

Consider the numbers: Analysts expect the top six U.S. banks' fourth-quarter profits to rise 16% from a year earlier, driven largely by a 34% jump in investment banking revenue. Jefferies, often a bellwether for the broader industry, reported that investment banking revenue jumped 20.4% to $1.19 billion from a year earlier.

The Earnings Season Preview

When JPMorgan Chase reports earnings on Tuesday, January 13, investors will be watching closely for signals about the M&A pipeline. The bank is expected to report earnings per share in the neighborhood of $4.93 to $5.01, with investment banking serving as a primary growth driver.

Goldman Sachs, which reports on January 15, may steal the show. With a Q4 earnings forecast of $10.65 per share and revenue expected at $14.42 billion, the firm is positioned to demonstrate just how powerful the dealmaking recovery has become.

The Megadeal Pipeline

Looking ahead, the pipeline of potential transactions suggests the M&A boom has legs. EY-Parthenon forecasts a 3% increase in deal volume for 2026, with private equity expected to see a 5% increase compared to corporate's 3% rise.

More telling is the seller sentiment. According to recent surveys, 79% of companies say they are potential sellers in 2026—a dramatic increase from recent years. Valuations remain the top reason cited for coming to market, as executives look to capitalize on elevated equity multiples.

Sectors to Watch

Several sectors are expected to drive dealmaking activity:

  • Technology: Consolidation among enterprise software companies and continued AI-related transactions
  • Healthcare: Pharmaceutical giants facing patent cliffs are hunting for biotech acquisitions
  • Energy: The transition to renewables is driving both traditional energy M&A and clean-tech deals
  • Financial services: Regional bank consolidation and fintech combinations
  • Industrials: Infrastructure spending is catalyzing consolidation among equipment makers and service providers

The Risks to the Outlook

For all the optimism, experienced dealmakers caution that the M&A outlook isn't without risks.

The Supreme Court's pending decision on tariff authority, expected by January 14, could introduce new uncertainty for cross-border transactions. If the administration gains expansive power to impose duties unilaterally, multinational acquirers may pause to reassess supply chain implications.

Similarly, any unexpected inflation spike that forces the Fed to reverse course could quickly freeze the deal market. The memory of 2022's rate shock—when rapidly rising borrowing costs killed hundreds of announced transactions—remains fresh.

What This Means for Investors

For individual investors, the M&A boom creates both opportunities and risks.

On the opportunity side, shares of potential acquisition targets often trade at significant premiums once deals are announced. Sectors seeing heavy consolidation—healthcare, regional banking, enterprise software—may offer attractive exposure to this trend.

The investment banks themselves represent another play on the dealmaking theme. Goldman Sachs, Morgan Stanley, and Jefferies have significant leverage to M&A activity, and their stocks tend to outperform when deal volumes surge.

The risk, however, is paying too much for what may prove to be a cyclical peak. M&A activity is notoriously boom-and-bust, and investors who pile in at the top of the cycle often suffer when the market inevitably cools.

The Bottom Line

Wall Street's dealmaking machine is operating at full throttle, and the conditions supporting M&A activity appear durable. Stable rates, abundant private equity capital, and a friendlier regulatory environment have combined to create what may be a historic year for corporate combinations.

For the bankers who spent years nursing their deal pipelines through the drought, 2026 represents vindication. For investors, it's an opportunity to participate in a wealth creation cycle that could reshape industries—but also a reminder that nothing in markets lasts forever.

The Great Unlocking is here. The question now is how long it will last.