Global M&A activity on track to eclipse 2021 deal boom, Morgan Stanley says

• Announced deals jumped more than 64% year-over-year in Q2 2026, with completions rising over 33%, signaling a broad-based recovery after years of high interest rates and volatility
• Alternative asset managers hold approximately $4.3 trillion in dry powder available for deployment, with sponsor-backed M&A announcements up more than 10% in Q2
• The Trump administration's 'lighter-touch regulatory regime' has created a more constructive M&A environment, easing concerns about aggressive antitrust enforcement that previously deterred large transactions

Summary: Morgan Stanley Projects Record M&A Activity for 2026

Key Projection:

Morgan Stanley forecasts global mergers and acquisitions (M&A) activity will reach a record $6.4 trillion in 2026, surpassing the 2021 deal boom.

Recent Performance:

Second quarter 2026 showed strong momentum with announced deals surging more than 64% year-over-year and deal completions climbing over 33%. Leading sectors include software, utilities, energy, and healthcare.

Key Drivers:

• Buoyant equity markets and renewed corporate confidence
• More receptive regulatory environment under the Trump administration's "lighter-touch" approach to antitrust enforcement
• Receding geopolitical uncertainty
• Private equity dry powder totaling approximately $4.3 trillion available for deployment
• Sponsor-backed M&A announcements rose more than 10% in Q2

Market Context:

The resurgence follows years of subdued activity due to high interest rates and market volatility that kept executives cautious. While Middle East conflicts and AI disruption concerns emerged earlier in the year, Wall Street has largely moved past these worries.

Risks:

Potential interest rate hikes remain a key risk factor, as higher borrowing costs typically dampen acquisition activity by increasing financing costs and complicating leveraged buyouts. However, Morgan Stanley notes the current M&A wave has proven resilient.

Looking Ahead:

Upcoming earnings reports from major U.S. banks will provide additional insight into the dealmaking outlook and debt/equity issuance trends. The analysts expect deal opportunities to expand as companies reshape their businesses and private equity firms deploy capital reserves.