Global M&A Rebounds as Financing Costs Ease and Sponsors Return

Global merger and acquisition activity accelerated sharply in the third quarter, with announced deal volume reaching $2.8 trillion. That is up 34% from the prior quarter and the strongest three-month total since the 2021-22 boom.

Private equity sponsors, sidelined for most of the last two years by high financing costs and weak exit markets, have re-emerged as buyers. Sponsor-backed deals accounted for 28% of Q3 volume, up from 19% in Q2.

"The bid-ask spread has finally narrowed," said Charlotte Nguyen, head of M&A advisory at Sterling Partners. "Sellers have accepted that 2021 valuations are not coming back, and buyers have accepted that they cannot wait for a perfect entry."

Strategic acquirers dominate the largest transactions. Technology, healthcare, and financial services account for more than half of announced volume. Cross-border deals are recovering more slowly, constrained by regulatory reviews in the U.S., Europe, and China.

Financing conditions have improved materially. Investment-grade bond issuance for M&A has reopened, and leveraged loan markets have seen the strongest quarter of new issuance since 2022. High-yield spreads at 310 basis points are close to the tightest levels of the cycle.

Regulatory risk remains a defining feature of the deal landscape. Antitrust authorities in Washington, Brussels, and Beijing continue to challenge transactions in concentrated industries. Sponsors and strategics alike are paying larger break fees and accepting longer timelines as a result.