Will the M&A Recovery Strengthen in 2026? (Baird)

Summary

• Global M&A deal value increased by +34% in 2025 despite a (7%) decline in total deal count compared to 2024.p.2
• Large transactions above $1B+ led the market rebound, with deal count up +25% and deal value expanding +50%.p.2
• Public companies in the U.S., Europe, and Japan possessed $4.3 trillion in cash balances entering Q4 2025, up nearly 30% over six years.p.7
• Baird's active sellside M&A backlog reached record highs at the end of November 2025, with deal count up +6% and deal value up +28% year over year.p.5
• Global private equity M&A exit transaction count rose 9%, while total disclosed M&A exit value jumped 45% in 2025.p.8
• The average holding period for private equity portfolio company exits increased to 7.0 years during 2022-2025, up from 6.2 years in 2018-2021.p.8

Key insights

1. Global M&A transactions in the $100M-$1B segment recorded modest gains, with deal count up +3% and deal value up +7% in 2025.p.2
2. U.S. IPO count expanded 40% YTD through November 2025, driven by the fastest pace of second-half offerings since 2021.p.3
3. Pitch activity at Baird during September-November 2025 reached its highest three-month total of the year, exceeding the 2022-2024 average pace by 32%.p.5
4. The period of September-November 2025 recorded 18 transactions valued at $10+ billion, setting a historic record for any three-month window.p.6
5. Acquiror stock price reactions to $500+ million U.S. public corporate deals were strong, with the 80th percentile day-one price increase reaching 3.4%.p.7
6. The distribution to paid-in capital ratio for U.S. buyout funds stood at 16% for the LTM through Q3 2025, trailing the 10-year average of 24%.p.8
7. Disclosed deal value for global financial sponsor acquisitions rose by an estimated 24% in 2025 even as total sponsor acquisition count remained near multi-year lows.p.9