AI and Repositioning Fueling Sustained M&A Surge into 2026

Key Quotes

"The first quarter of the year as you said there was a fair degree of uncertainty post election heading into 2025 where people weren't sure how it would play out and so the first quarter was relatively quiet i would say april was extremely quiet post liberation day heading out of april into may you started to see a crescendo of transactions particularly on the larger side and then i would say the last three months heading into the fall and the winter has rivaled what we saw in 2021 which has been the most active in fact in my career i did not think we would look back and see a period as active as we saw in 2021 the last quarter the last three four months have rivaled 2021 and if you look at the year in total now the number of 10 billion transactions is up 100 over 2024 and so it's not just become an active year it's become one of the most active years in history"

Stephan Feldgoise explains that despite initial uncertainty and headwinds in early 2025, the latter half of the year saw a significant surge in deal-making activity. This surge, particularly in large transactions, has rivaled and even surpassed the record levels seen in 2021, making it one of the most active years in history.

"The strategic imperatives coming out of covid to reposition businesses not for the next two years but for the next 20 or 30 were severely challenged by headwinds i would say in the prior four or five years coming into the mid part of 2025 capital markets wide open the ability to finance the ubiquity of public and private capital and most importantly the ability to get things done you saw a number of very large whether they be cross border or complex or even incentive industries transactions get completed so ceos and boards prompted in a large part by their shareholders were saying to them if there's something that makes long term strategic sense you should be at least looking at it and so files that were dormant for a period of time were pulled out and looked at and what you saw is not only did companies look at those transactions but recognized they could get them done and that's why you've seen such a large number of transactions"

Stephan Feldgoise highlights that the long-term strategic needs for businesses, amplified by the pandemic, were previously hindered by headwinds. However, with open capital markets and the ability to execute deals, CEOs and boards, influenced by shareholders, began pursuing transactions that offered long-term strategic value, leading to a substantial increase in deal volume.

"AI is not just AI companies where you haven't seen a lot of m a specifically in AI companies but everything related to AI so that might be software that might be real estate that might be data centers that might be semiconductors all those industries power suppliers all those industries have seen consolidation again as a derivative of AI so the i'll call it the ai universe is certainly very very active and we're in the early innings obviously of the ai generation we would expect to see more there"

Stephan Feldgoise points out that the impact of Artificial Intelligence (AI) on mergers and acquisitions extends beyond AI-specific companies. He explains that industries supporting AI, such as software, real estate, data centers, and semiconductors, are experiencing consolidation as a direct consequence of AI's growth. Feldgoise suggests that this "AI universe" is highly active and still in its early stages, indicating further M&A activity.

"AI is completely new so not only is it seismic in terms of its potential impact and thinking about how to make decisions on m a and which are very long cycle decisions but the skills and expertise in the boardroom is very limited in and around AI and so boards and management teams and advisors are having to both advise and make decisions on something that is super impactful but there's a very short experience base and that's nobody's fault it's just it came on so quickly and so that's the decision making in the boardroom that's very very difficult and there's not an m a situation or an m a decision that's being made without extraordinary consideration about what is going to be the AI impact not only to our company but to the target company or the company that we're merging with"

Stephan Feldgoise discusses the challenge AI presents to corporate decision-making, particularly in M&A. He notes that AI's impact is seismic and novel, meaning boardrooms often lack the necessary expertise to fully assess its implications for long-term strategic decisions. Feldgoise emphasizes that M&A decisions now require extraordinary consideration of AI's potential impact on all involved entities due to this limited experience base.

"The conglomerate discount persists if there are businesses that either are better owned or there's a you know a better owner for a given business inside of a larger company that creates value for shareholders i would say that boards and companies have become very facile and very familiar with the simplification move to achieve and deliver that value to shareholders and you can't ignore the fact that activism is still pervasive and so activists continue to look at every company and think about should they be a portfolio should they be separate and will there be value creation in those separation alternatives so the the path to simplification continues but that's not a new trend that we've seen that you know certainly for well over a decade"

Stephan Feldgoise explains that the persistence of the "conglomerate discount" drives a trend towards simplification in corporate structures. He states that companies and boards are adept at divesting non-core businesses to create shareholder value, a strategy also fueled by pervasive shareholder activism. Feldgoise clarifies that this drive for simplification is not a new phenomenon but has been ongoing for over a decade.

"Look private equity is still between 30 and 40 of the m a at its peak it gets closer to 40 maybe a bit over 40 in the last few years given that they've had a more difficult time monetizing their portfolios it's been more towards the lower 30s but still a huge part and frankly a growing part we're in the second or third inning of the private equity recovery and when i say recovery getting to a market where they'll be able to do significant monetizations of their portfolio companies so we're still in that second third inning that being said they continue to invest they've been able to many of the funds raise significant amounts of capital but now private equity's gotten much broader before it was traditional private equity funds now private equity can be sovereign funds sovereign funds doing transactions directly sovereign funds partnering with corporates it can be very large family offices part of what the tech world has created are extraordinarily large family offices that invest either alongside or directly much like private equity private equity is half of it private capital now private debt obviously has become very large as well"

Stephan Feldgoise describes private equity's significant and growing role in M&A, representing 30-40% of activity. He characterizes the current market as being in the "second or third inning" of a private equity recovery, focusing on the ability to monetize existing portfolios