A surge in mergers and acquisitions activity in the first quarter suggests that the current dealmaking cycle still has room to run, according to Tim Ingrassia, co-chairman of Global Mergers & Acquisitions in Goldman Sachs Global Banking & Markets.

To get a measure of “pure M&A volume,” Ingrassia omits spinoffs, private company funding rounds, and deals involving special purpose acquisition companies, or SPACs. Using this method, he says pure M&A could reach $3.8 trillion this year, topping the levels of 2025 and 2021.

For all the uncertainty in the global economy, Ingrassia says M&A remains driven by two fundamentals: cyclicality and growth.

“M&A cycles tend to be predictable and typically last six to seven years,” he says. “We’re in year four, and while it’s not impossible, it’s really, really hard to interrupt the momentum of the cycle.”

Where will the deal flow come from? Ingrassia cited several bullish factors, including the push by companies to burnish their long-term valuations in the face of artificial intelligence (AI), and the private equity industry’s need to sell long-held portfolio companies and return profits to their investors.

Will uncertainty in the global economy slow M&A?

Ingrassia cautioned that uncertainty about the global economy can prompt company leaders to hold off on short-term decision-making about M&A. Given the energy crisis stemming from the conflict with Iran, Ingrassia says it is difficult to foresee how this latest bout of volatility may play out.

“There is humility in this year’s market,” he says. “The level of confidence in predictions is less than usual.”

Still, Ingrassia noted that the Goldman Sachs US Economic Policy Uncertainty Index is close to the level set when US tariffs jumped last May. And 2025 marked one of the best years ever for M&A.

“We’ve gotten used to uncertainty,” Ingrassia says. “It’s the new normal.”

The M&A market hit a high in 2021 as interest rates fell close to zero during the Covid pandemic and acquirers took advantage of the low cost of capital. Dealmaking activity declined more than 41% over the following two years before rebounding in 2024 and 2025, according to Dealogic and Global Banking & Markets

An interesting facet of this cycle, he says, is how fewer deals are generating more value. Looking at pure M&A transactions worth more than $500 million, Ingrassia found there were 1,080 deals in 2025, about 14% fewer than 2021. Yet the value of M&A transactions last year was 3.5% higher, according to Dealogic and Global Banking & Markets. “There’s room to grow,” says Ingrassia.

Why big deals augur more growth for ‘bread and butter’ M&A

The upward trajectory of big deals—those worth more than $10 billion—is a sign of momentum, Ingrassia says. In 2025, big deals jumped 24% over the prior high in 2021, according to Dealogic data.

Big deals have historically led the rest of the M&A market because large acquirers have more resources to research and pursue multiple transactions simultaneously. 

“Big companies can act faster and they foreshadow what the rest of the market is going to do,” says Ingrassia. This usually means an increase in smaller “bread and butter M&A” is on the way.

How ‘the tyranny of terminal value’ is spurring M&A activity

Another big factor in this M&A cycle is the growing influence of “terminal value.” This term refers to the assumption investors make about what a stock will be worth far in the future—Ingrassia describes the range as spanning from “six years to infinity.”

With the advent of AI, investors are increasingly making decisions based on terminal value rather than current business performance. This is partly what happened in the selloff of software stocks earlier this year, says Ingrassia. AI has amplified what he called “the tyranny of terminal value” and spurred CEOs to consider M&A as a solution.

“Terminal value is one of the biggest contributors to why buyers need to participate in M&A,” Ingrassia says. “They know they can’t milk their way to success—they have to buy terminal value. So acquirers are leaning in. And sellers who fear the future are more receptive to accepting the pricing of a deal.”

Private equity firms are under pressure to sell portfolio companies

Speaking of sellers, Ingrassia says private equity firms are under pressure to ramp up sales of their portfolio companies and increase the profits they return to their investors. Buyout fund distributions have fallen close to a 16-year low as recent fund vintages generate limited liquidity, according to data from MSCI and Global Banking & Markets.

“They need to sell,” Ingrassia says. “And the M&A market depends more on supply than demand—it’s driven by sellers.”

Looking ahead, Ingrassia says investors should also be attuned to the rhythm of the M&A cycle. When there is a lot of deal action in the marketplace, CEOs and boards tend to get motivated.

“M&A is contagious,” Ingrassia says. “When other people are doing it, you have permission to pursue your own deals. You do not look like an outlier. M&A often leads to more M&A, and big deals often lead to small deals. When the mood shifts, it can take a while to recover.”

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