Key Takeaways
- • Private equity sponsors are positioned to drive M&A momentum through the second half of 2026, supported by record levels of undeployed capital and improving financing access, according to Alex Kelly, global co-chair of M&A and private equity practice at Latham & Watkins.
- • Deal activity patterns in 2026 are expected to replicate 2025's trajectory: early caution followed by strong rebound, with underlying market fundamentals remaining supportive despite macroeconomic and geopolitical headwinds.
- • Secondary market transactions and continuation vehicles are accelerating as PE sponsors exit portfolio assets through structured solutions beyond traditional IPO and trade sale routes, addressing a persistent backlog of PE-owned companies.
- • Asset management consolidation continues as larger platforms acquire smaller firms to expand product capabilities and capture institutional capital flows, with fundraising dynamics concentrating inflows among the largest managers.
- • Market participants are increasingly accepting volatility and uncertainty as structural features rather than temporary disruptions, enabling more confident deal planning.
Summary
Mega-deal activity is poised to accelerate through the second half of 2026, driven primarily by private equity sponsors deploying substantial dry powder and benefiting from improved market conditions. According to comments from Alex Kelly, global co-chair of M&A and private equity practice at Latham & Watkins, speaking at the SuperReturn conference in Berlin, dealmaking patterns will likely track 2025's experience—with initial market optimism giving way to headwinds before a strong recovery late in the year.
The foundation for continued PE-driven M&A remains robust. Record levels of undeployed capital across the private equity industry, combined with increasingly accessible financing markets, provide sponsors with both the capital and the means to execute larger transactions. Kelly noted that underlying market fundamentals support this activity despite periodic global volatility, suggesting that sponsors are moving forward with conviction rather than hesitation.
A significant driver of transactional volume will be the substantial backlog of PE-owned assets seeking exits. Rather than relying solely on traditional routes such as IPOs or trade sales, sponsors are increasingly turning to structured alternatives. The secondary market has expanded rapidly in recent years as investors seek liquidity options outside conventional exit channels, with continuation vehicles and secondary transactions becoming mainstream solution paths for portfolio companies.
Beyond direct PE sponsorships, the broader asset management industry is experiencing a consolidation wave. Larger platforms are acquiring smaller firms to broaden product offerings and capture a growing share of institutional capital flows. Recent fundraising trends show concentration of inflows among the largest managers, which is reinforcing this consolidation dynamic and signaling confidence in scale-based competitive advantages.
Market participants have adopted a pragmatic stance on uncertainty. Rather than treating volatility as temporary, the industry increasingly views uncertainty as a structural characteristic of the investment landscape, enabling more realistic long-term deal planning and execution strategies.
The foundation for continued PE-driven M&A remains robust. Record levels of undeployed capital across the private equity industry, combined with increasingly accessible financing markets, provide sponsors with both the capital and the means to execute larger transactions. Kelly noted that underlying market fundamentals support this activity despite periodic global volatility, suggesting that sponsors are moving forward with conviction rather than hesitation.
A significant driver of transactional volume will be the substantial backlog of PE-owned assets seeking exits. Rather than relying solely on traditional routes such as IPOs or trade sales, sponsors are increasingly turning to structured alternatives. The secondary market has expanded rapidly in recent years as investors seek liquidity options outside conventional exit channels, with continuation vehicles and secondary transactions becoming mainstream solution paths for portfolio companies.
Beyond direct PE sponsorships, the broader asset management industry is experiencing a consolidation wave. Larger platforms are acquiring smaller firms to broaden product offerings and capture a growing share of institutional capital flows. Recent fundraising trends show concentration of inflows among the largest managers, which is reinforcing this consolidation dynamic and signaling confidence in scale-based competitive advantages.
Market participants have adopted a pragmatic stance on uncertainty. Rather than treating volatility as temporary, the industry increasingly views uncertainty as a structural characteristic of the investment landscape, enabling more realistic long-term deal planning and execution strategies.
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