$123 billion, driven by large strategic acquisitions. Private Equity PE activity rebounded in 2025, particularly in the second half, supported by substantial dry powder and easing interest rates. Global buyout value increased 39% to approximately $850 billion, with 13 mega-buyouts recorded – more than double the prior year. North America led the recovery, with buyout value rising 69% to approximately $500 billion. PE investment in Japan and India grew as well. Global buyout count fell, reflecting a focus on larger deals, but signs point toward middle market activity rebounding as well, particularly in the U.S. Exit activity also improved, with global exit value increasing 43% to approximately $630 billion, driven primarily by trade sales and secondary buyouts, while a significant backlog persisted. Sponsors increasingly relied on creative structures, including continuation vehicles, with more than 70 companies transferred to continuation funds during the year, up from 54 in 2024. Looking Forward We expect 2025’s momentum to carry into 2026, albeit with continued selectivity and sensitivity to macro and regulatory developments. Focus on Scale and Strategic Positioning: Deal activity is likely to continue to favor transactions that materially reshape companies and portfolios, including divestitures as well as acquisitions, particularly in sectors such as technology, infrastructure, and energy, where long-term strategic considerations outweigh near-term volatility. Companies will continue to focus on supply chain realignment and resilience. Regulatory Considerations Remain Central: Antitrust scrutiny, foreign investment regimes, and export controls are expected to remain key factors in deal planning, influencing both transaction structure and execution timelines. Availability of Financing: Financing should continue to be available as interest rates decrease or stabilize and private credit lenders continue to seek share. Heightened Sensitivity to Macro Conditions: Tariffs and other trade dynamics (including the potential for tariff refunds in light of ongoing legal challenges to tariff authority) and geopolitical developments will continue to affect diligence processes, valuation assumptions, financing availability, and deal certainty. Cross-Border Dealmaking Stays Opportunistic Amid Policy Risk: Expect more Europe-U.S. two-way traffic and supply chain realignment plays, even as tariffs and national security reviews add friction and shape where platforms are built. Liquidity Goals for Financial Sponsors: Ongoing pressure from limited partners to generate liquidity is expected to keep financial sponsors active across a range of deal types, including continuation funds, secondaries, and more bespoke structures, as well as IPOs and strategic exits where market conditions allow. Tech and Life Sciences as Priority Sectors: Technology, including AI companies, data centers, and other related infrastructure, and life sciences remain well positioned to drive a meaningful share of M&A activity. The second half of 2025 marked a decisive return of confidence at the top end of the market, laying the groundwork for a more balanced, but still selective, M&A environment in 2026. 38 Morrison Foerster
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