Market Maker• Dec 15, 2025• 46:53Interview

2026 Outlook: The M&A Unwind, PE Exits & Private Credit

From Market Maker

Stephen Barnett

Executive Summary

Global M&A activity rebounded in 2025, with deal value reaching $4.23 trillion, up 34% year-on-year, though the number of completed deals declined.
Significant risks are emerging in the $3 trillion private credit market, with parallels to the 2008 financial crisis, including 'rating shopping' and an estimated 15% of borrowers unable to cover interest payments.
The private equity sector faces a significant 'overhang' issue, with firms holding over 50,000 businesses and struggling with limited exit opportunities like IPOs or strategic sales.
Big Tech continues to dominate, with predictions for Google to become the world's largest company and potential for major strategic moves involving OpenAI, Microsoft, and NVIDIA in 2026.

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Concerns Raised

The private credit market is exhibiting bubble-like characteristics reminiscent of the 2008 crisis.
Private equity firms face a critical lack of exit opportunities for their vast portfolio of companies.
A significant portion (15%) of private credit borrowers are 'zombie companies' unable to cover interest payments.
The practice of 'rating shopping' is re-emerging, obscuring the true risk of private debt instruments.

Opportunities Identified

The M&A market has strong momentum for continued large-scale dealmaking.
Google is positioned for significant growth, with predictions of it becoming the world's most valuable company.
Elite boutique investment banks are capturing high-value deals by focusing on senior-level relationships.
Potential for a major acquisition or shake-up at OpenAI presents a strategic opportunity for tech giants.

Key Themes

M&A Market Rebound

The episode analyzes the 2025 mergers and acquisitions landscape, which saw a significant 34% increase in deal value to $4.23 trillion. Despite this growth in value, the actual number of deals decreased, indicating a trend towards larger, more strategic transactions, exemplified by the $55 billion LBO of Electronic Arts.

This signals a return of confidence for dealmakers after a slower 2024 and highlights the continued dominance of bulge-bracket banks like Goldman Sachs and JP Morgan, as well as the strategic focus of elite boutiques like Centerview Partners.

Systemic Risk in Private Credit

A deep dive into the burgeoning $3 trillion private credit market reveals concerning parallels to the pre-2008 financial system. The discussion highlights a resurgence of 'rating shopping' among smaller agencies, off-balance sheet financing, and the fact that 15% of borrowers cannot cover their interest payments.

This theme flags a potential source of major financial instability. While private credit shifts risk away from regulated banks, their interconnectedness means contagion is still a significant threat to the broader financial system.

Private Equity Overhang and Exit Crisis

The private equity industry is grappling with a massive portfolio of over 50,000 companies and a shrinking set of viable exit routes. With PE firms acquiring far more businesses than they are selling, the market faces a 'pass the parcel' scenario where assets are traded between sponsors, raising concerns about inflated valuations and future returns.

This situation creates significant pressure on PE funds to generate returns for their limited partners and could lead to mark-downs, defaults, or distressed sales, impacting investors and the companies themselves.

The Future of Big Tech and AI

The conversation touches on the continued dominance and future trajectory of major tech players. It includes a bold prediction that Google will become the world's most valuable company and speculates on major strategic shifts at OpenAI in 2026, suggesting an acquisition by Microsoft or NVIDIA, or the departure of CEO Sam Altman.

These predictions underscore the high stakes and volatility within the AI sector, suggesting that the current market structure is not yet settled and that significant consolidation or leadership changes are on the horizon.

Monetization of Financial Personalities

The episode highlights a modern trend where influential financial figures can directly monetize their personal brand, using Michael Burry as a prime example. After closing his fund, Burry launched a Substack that generated an estimated $8 million in annual revenue within days, demonstrating the power of a direct-to-consumer model in finance.

This reflects a shift in the media landscape where established credibility can be converted into a scalable, high-margin business, bypassing traditional fund management structures and fees.

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Topics

M&A 2025 Market Review 2026 Predictions Private Credit Private Equity Systemic Risk Leveraged Buyout (LBO)Investment Banking Goldman Sachs JPMorgan NVIDIA Google OpenAI Michael Burry Creator Economy

Processed Apr 2, 2026 yt-dlp + mlx-whisper + Gemini