What began as an optimistic year for deal activity, lower interest rates, and sustained economic growth, quickly became subdued by increasing political and macroeconomic uncertainty, tariff unpredictability, and persistent inflation pressures leading to the continued heightened cost of capital through the first three quarters of 2025. Despite these headwinds, sponsor led M&A activity has shown resilience after being propelled by a strong third quarter. Overall sponsor led deal count has increased by 9.7% over the same period in 2024 and has seen the aggregate deal value through the first three quarters of 2025 already surpass recent cycle peaks, reaching $869.4 billion so far in 2025 and posting a 36.6% increase year-over-year. The surge in deal value has been anchored by a continued wave of “mega deals” (i.e., transactions with deal values exceeding $1 billion) as private equity sponsors focused on fewer, larger transactions.
