Chart of the Week

Global Merger & Acquisition (M&A) activity reached record levels in the first quarter, despite geopolitical headwinds, public market volatility, inflation concerns, and ongoing supply chain disruptions. The quarter remained top-heavy with megadeals driving a lot of the growth, as financing was more accessible for high-quality assets, while companies with weaker credit profiles experienced delays.

The chart above illustrates the increase in U.S. Enterprise Value‑to‑Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA) valuation multiples over recent years. This suggests an investor preference for large, high-quality U.S. companies. The focus has rotated away from Information Technology, Financials, and Healthcare sectors amid concerns around pronounced artificial-intelligence (AI)-driven disruption and tighter private credit conditions, and shifted toward Energy and Materials sectors, supported by increased demand for infrastructure and energy transition investments.

We expect global M&A activity to continue its recovery trajectory, particularly as political and geopolitical uncertainties may begin to ease in the latter part of the year. Current deal concentration may broaden as macroeconomic conditions improve and participation expands. In our view, the improved deal and exit activity can help reduce the backlog of mature private companies awaiting liquidity events and enable capital to be returned to investors, supporting future investment cycles.

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