JP Morgan's Making Sense• Dec 12, 2025• 25:02Interview

Mega deals and market shifts: 2025 investment banking recap and 2026 outlook

From JP Morgan's Making Sense

Dorothy Blessing(Host)•Kevin Foley(Guest)•Anno Ehingard(Guest)

Executive Summary

Global M&A volume rebounded to $4.5 trillion in 2025, a 38% year-over-year increase, driven by a doubling of mega-deals (>$10B) as companies pursued 'focused scale'.
Artificial Intelligence has become an omnipresent force, with 90% of organizations reporting regular use and significant budget allocation, fueling high valuations and strategic minority investments.
Private equity is in a 'capital cycling' phase, with a large backlog of assets driving growth in sponsor-backed IPOs, the secondary market (up 60% YoY), and the use of continuation vehicles.
The outlook for 2026 is bullish, with predictions of a 25% increase in global IPO issuance and robust debt markets capable of supporting LBOs up to $25 billion and corporate acquisitions over $40 billion.

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Concerns Raised

Failure of AI to deliver expected efficiency and growth benefits as quickly as anticipated
Persistent inflation that negatively impacts central bank policy
Ongoing geopolitical concerns and unforeseen 'known unknowns'

Opportunities Identified

Executing large-scale M&A and LBOs due to deep and supportive debt markets
Capitalizing on the strong 2026 IPO market, particularly for sponsor-backed assets
Investing across the AI ecosystem, from infrastructure to application layers
Utilizing the booming secondary market and continuation vehicles for PE portfolio liquidity

Key Themes

The Resurgence of Mega-Deals

The M&A market saw a dramatic recovery in 2025, with volume hitting $4.5 trillion. This was largely driven by a record number of mega-deals, as corporations and sponsors pursued 'focused scale' to gain competitive advantages, access to capital, and higher market valuations.

This signals a return of confidence among corporate leaders and investors, indicating a willingness to execute large, transformative transactions despite macroeconomic uncertainty. It highlights the strategic premium being placed on market leadership and scale.

AI as a Core Economic Driver

AI has moved from a niche technology to a fundamental business priority, influencing everything from corporate strategy and digital budgets to M&A and capital market sentiment. With demand far exceeding supply, the sector is driving significant investment in infrastructure, data centers, and a wide array of software companies.

Understanding the AI investment cycle is critical for investors and executives. The current dynamic supports high valuations and creates opportunities for both strategic acquisitions and minority investments to gain exposure to future market leaders.

The Evolving Private Equity Lifecycle

Financial sponsors are navigating a complex environment with a large backlog of assets requiring monetization. This has led to a surge in sponsor-backed IPOs, which are outperforming the market, and explosive growth in alternative liquidity solutions like the secondary market and continuation vehicles.

The traditional PE model of 'buy, hold, sell' is diversifying. LPs and GPs are increasingly using sophisticated tools to manage portfolios, return capital, and hold onto high-performing assets for longer, creating new opportunities in private capital markets.

Resilient and Deep Capital Markets

Despite volatility, both equity and debt markets demonstrated remarkable resilience and depth in 2025, supported by liquidity and positive sentiment. The debt markets, in particular, show a massive appetite for new M&A-related financing, with the capacity to fund multi-billion dollar take-privates and acquisitions.

The availability of capital is a key enabler for M&A and corporate growth. The current robust financing environment provides a strong tailwind for dealmaking in 2026, suggesting that the primary constraint on large deals may be finding suitable targets, not securing funding.

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Topics

M&A Mega-Deals IPO Market Private Equity Sponsor-backed IPOs Leveraged Buyouts (LBO)Debt Markets Direct Lending Artificial Intelligence (AI)AI Investment Capital Markets Take-Private Transactions Continuation Vehicles Secondary Markets Market Outlook 2026

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