Key Takeaways
- • Alex Kelly, global cochair of Latham & Watkins, forecasts an M&A resurgence and private equity acceleration in the second half of 2026, with mega deals becoming "the new normal" driven by available financing and larger asset acquisitions.
- • Law firms including Latham & Watkins, Simpson Thacher & Bartlett, and Willkie Farr & Gallagher are aggressively hiring M&A and private equity talent in January 2026, signaling anticipated deal flow surge based on market conditions and client demand.
- • M&A practice growth reached 3.3% in the prior period (highest tracked by Thomson Reuters), with litigation at 2.5%, indicating a "highly atypical" simultaneous surge in transactional and countercyclical work not seen since the financial crisis.
- • Bain & Company's midyear 2026 PE report, citing Ontra NDA data, indicates PE deal activity remaining roughly flat through July 2026, suggesting stable but measured market conditions heading into the second half.
- • Private equity market liquidity measured on a trailing 12-month basis declined from $2.2 trillion to $2.1 trillion, with deal count declining more sharply, yet executives anticipate improvement as volatility fades and rate expectations stabilize.
Summary
Alex Kelly, global cochair of Latham & Watkins, is forecasting a significant surge in private equity-fueled M&A activity during the second half of 2026, driven by mega deals that have become "the new normal" in corporate transactions. According to Kelly, companies now have increased access to financing, enabling larger acquisitions with increasingly global and multijurisdictional scope. This outlook aligns with broader market sentiment that volatility may be fading and rate expectations stabilizing, which should improve visibility and financing availability for sponsors and institutional investors.
The optimistic second-half forecast is evidenced by aggressive talent acquisition across major law firms. Latham & Watkins, Simpson Thacher & Bartlett, Willkie Farr & Gallagher, O'Melveny, Seyfarth Shaw, Morrison & Foerster, and Clifford Chance have all announced M&A and private equity partner hires in recent weeks. This stockpiling of dealmaker talent indicates law firms are positioning for elevated transaction volume, capitalizing on what appears to be a windfall period for deal-related work following a historically strong prior year.
The prior period registered notable growth metrics that underscore the M&A boom. Thomson Reuters data showed M&A practice growth of 3.3%—higher than any other tracked practice area—while litigation grew 2.5% and real estate and general corporate work grew 2.4% and 2.0% respectively. Analysts characterized this simultaneous surge in transactional and countercyclical work as "highly atypical," noting such dynamics historically occur only during periods of severe market disruption, making the recent activity exceptional.
However, current data suggests measured rather than explosive growth. Bain & Company's 2026 midyear private equity report, leveraging Ontra NDA data, indicates PE deal activity is expected to remain roughly flat through July 2026, signaling stable but not dramatically elevated conditions in the near term. Private equity market liquidity on a trailing 12-month basis declined from $2.2 trillion to $2.1 trillion, with the number of deals declining more sharply. Despite this moderation, industry participants anticipate conditions will normalize as trade policy clarity improves and interest rate volatility declines, positioning the second half for stronger activity than the first half.
The market consensus reflects conditional optimism: sponsors and LPs should expect more active second-half dealmaking contingent on macroeconomic stability, particularly around rate expectations and trade policy. The combination of mega-deal prevalence, robust client financing capacity, and strategic talent positioning by elite law firms suggests infrastructure is being built for an anticipated acceleration, though near-term data remains measured as of mid-2026.
The optimistic second-half forecast is evidenced by aggressive talent acquisition across major law firms. Latham & Watkins, Simpson Thacher & Bartlett, Willkie Farr & Gallagher, O'Melveny, Seyfarth Shaw, Morrison & Foerster, and Clifford Chance have all announced M&A and private equity partner hires in recent weeks. This stockpiling of dealmaker talent indicates law firms are positioning for elevated transaction volume, capitalizing on what appears to be a windfall period for deal-related work following a historically strong prior year.
The prior period registered notable growth metrics that underscore the M&A boom. Thomson Reuters data showed M&A practice growth of 3.3%—higher than any other tracked practice area—while litigation grew 2.5% and real estate and general corporate work grew 2.4% and 2.0% respectively. Analysts characterized this simultaneous surge in transactional and countercyclical work as "highly atypical," noting such dynamics historically occur only during periods of severe market disruption, making the recent activity exceptional.
However, current data suggests measured rather than explosive growth. Bain & Company's 2026 midyear private equity report, leveraging Ontra NDA data, indicates PE deal activity is expected to remain roughly flat through July 2026, signaling stable but not dramatically elevated conditions in the near term. Private equity market liquidity on a trailing 12-month basis declined from $2.2 trillion to $2.1 trillion, with the number of deals declining more sharply. Despite this moderation, industry participants anticipate conditions will normalize as trade policy clarity improves and interest rate volatility declines, positioning the second half for stronger activity than the first half.
The market consensus reflects conditional optimism: sponsors and LPs should expect more active second-half dealmaking contingent on macroeconomic stability, particularly around rate expectations and trade policy. The combination of mega-deal prevalence, robust client financing capacity, and strategic talent positioning by elite law firms suggests infrastructure is being built for an anticipated acceleration, though near-term data remains measured as of mid-2026.
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