What's the read on event-driven, M&A, and special situations, and what changed last quarter?

Global M&A activity rebounded significantly in 2025, with deal value increasing by 34-38% year-over-year to approximately $4.2-4.5 trillion [10, 11, 14]. This resurgence was driven by a doubling of mega-deals valued over $10 billion as corporations pursued "focused scale" , exemplified by strategic moves like Amazon's $11.6 billion acquisition of Globalstar . However, this deal-making occurs within a bifurcated market. The recent market rally was heavily concentrated in mega-cap stocks, masking poor underlying health [2, 7]. Market breadth has deteriorated sharply, with the percentage of companies outperforming the S&P 500 recently falling to a **level not seen since 1973** , and only half of index constituents trading above their 50-day moving average . This dynamic makes M&A the primary exit path for many portfolio companies, given a constrained IPO market and broader liquidity issues .

The nature of event-driven opportunities has shifted, influenced by increased volatility and structural changes in the market. The end of the cheap money era has heightened the importance of specific investment catalysts , while geopolitical shocks, such as the U.S.-Iran conflict in the first quarter, have created extreme market swings based on headlines alone [2, 13]. Regulatory actions, like the antitrust ruling against Live Nation, are also creating special situations with immediate financial impact . The most profound disruptive force is artificial intelligence, which is creating a valuation paradox in the tech sector and fundamentally altering the definition of a high-quality company; what appeared to be a durable business could, due to AI, very **rapidly became less so** . This environment, characterized by some as less efficient due to the rise of passive and retail trading , rewards a flexible, catalyst-driven investment approach over rigid adherence to a single style [3, 12].

Private markets are facing a period of significant stress and recalibration, creating distinct risks and opportunities. The private credit market, now a mainstream and highly competitive asset class, has seen its excess returns compress [18, 25]. More critically, systemic risks are emerging in the $3 trillion market, including a resurgence of "rating shopping" and an estimated 15% of borrowers unable to cover interest payments, drawing parallels to the 2008 financial crisis [10, 15]. A recent wave of fear wiped over $10 billion in market capitalization from major alternative asset managers . In private equity, firms are grappling with a massive "overhang" of over 50,000 portfolio companies amid limited exit opportunities . This is compounded by a severe fundraising drought; in the first quarter, **no buyout fund closed above $1