David Solomon expresses extreme optimism for dealmaking, citing a robust backlog and active client dialogues. Barring a major exogenous shock, he anticipates 2026 could surpass previous records for M&A activity, driven by a more constructive regulatory environment and strong CEO confidence.

The term 'private equity' is now insufficient. The M&A market's capital base has expanded to include sovereign wealth funds and large, tech-generated family offices that invest directly or co-invest like traditional PE firms. This diversification creates a larger, more resilient pool of capital for deals.

Contrary to a slow market narrative, deal flow has sharply accelerated. Blackstone's Michael Zwadsky revealed that August 2024 was the firm's biggest investment committee month in three years, and the summer was the third most active for M&A since 2008, signaling a real inflection point for transactions.

The era of scaling through low-ACV, product-led growth is fading. Today's rapid growth stories, especially in the capital-intensive AI space, are driven by massive, founder-led strategic deals for infrastructure and partnerships, reminiscent of the pre-dot-com internet era.

As the semiconductor industry scales towards a $1.7 trillion market, the primary driver for large M&A deals has become building scale. Rather than just buying novel technology, giants like Nvidia and AMD are acquiring companies to consolidate their positions and capture a bigger piece of the massive revenue opportunity.

Despite geopolitical risk and economic uncertainty, M&A is surging because companies are executing on long-term (20-30 year) strategic repositioning plans conceived post-COVID. When capital markets open, even briefly, companies are quick to act on these dormant, high-conviction plans, ignoring near-term volatility.

AI's primary impact on M&A isn't the direct acquisition of technology. Instead, the AI revolution reinforces the strategic belief that massive corporate scale is essential for future competitiveness. This belief fuels the appetite for large, strategic M&A to consolidate and grow.

The pool of enterprise software acquisition targets has doubled to 160 companies in one year. This surge is a direct consequence of the AI boom, as would-be buyers like Big Tech have redirected capital away from traditional software and towards AI-native opportunities. This leaves many otherwise healthy software startups on the market.

After hitting 30-year lows in early 2024 (adjusted for economic size), global M&A activity has surged 64% year-over-year. This dramatic turnaround in corporate aggression, combined with rising AI-driven capital expenditure, strongly mirrors the late-stage cycle dynamics of 1997-98 and 2005-06, suggesting the expansion is not over.