Three Signs Deal Activity Is On The Rise
Coming into this year, we were expecting a meaningful resurgence in dealmaking activity fueled by the new administration’s pro-business, deregulatory agenda. But tariff-induced uncertainty curtailed any momentum. However, we are now starting to see three distinct drivers that could accelerate the recovery.
1. Artificial intelligence
Artificial intelligence is rapidly becoming a catalyst for transformative change in the M&A and IPO landscapes. Generative AI is reshaping the M&A process, with about one-in-five companies currently utilizing AI, and expectations are that more than half will integrate it by 2027, according to Bain. AI’s ability to improve various stages of dealmaking – from sourcing and screening to diligence and integration – is raising the standard for competitors. Those leveraging AI are gaining a competitive edge, making it essential for others to adopt these technologies or risk falling behind in the fast-paced environment.
AI deal value so far this year exceeds $140 billion, far surpassing last year’s approximately $25 billion total.
2. Financial sector deregulation
While tariffs have dominated headlines, a significant conversation around bank deregulation is unfolding, poised to spur M&A activity through increased lending. Following the Global Financial Crisis, regulations were tightened to strengthen bank balance sheets and prevent another collapse. However, these regulations have become increasingly stringent over time. In the wake of the March 2023 banking crisis and the proposed Basel III Endgame rules, U.S. banks have built up capital amid regulatory uncertainty. Now, with the new administration signaling a potential easing of these regulations, banks are expected to release some of this built-up capital.
Deregulation is seen as the next phase of the administration’s agenda. As banks gain more balance sheet capacity, they are likely to use it for capital distributions to shareholders, M&A activity for themselves and lending growth for the broad economy.
3. Private equity firms are looking for alternative avenues to exit
The private equity market is currently navigating a complex landscape marked by a dichotomy between investments and exits. On the investment side, the industry is flush with near-record levels of dry powder, with approximately 25% of it being over four years old. Conversely, exit activity is at its lowest since the Global Financial Crisis, with distributions as a percentage of net asset value (NAV) at multi-year lows.
That said, secondaries have come into focus. Global secondary volume surpassed $160 billion in 2024, a roughly 45% increase from 2023. Secondaries provide diversification by allowing investors to acquire interests in existing funds across different vintage years and managers, mitigating risks associated with single-fund investments. They may also bypass the early-stage “J-Curve” effect, potentially allowing investors to see returns sooner by investing in more mature funds, often at a discount to NAV.
Rick Barragan is the Managing Director,
Los Angeles Market Manager, for
J.P. Morgan Private Bank.
[email protected] | (310) 860-3658
privatebank.jpmorgan.com/los-angeles
Source: “Is deal activity on the rise? 3 signs we see now,” Audrey Weiss, Global Investment Strategist, June 20, 2025
