Latham Sees Private Equity Driving 2026 Deals

Mega deals will drive an M&A resurgence that accelerates in the second half of 2026, according to Alex Kelly of Latham & Watkins. Kelly's call lands at a moment when boards, bankers and buyout firms are all looking for the same thing: proof that the deal market has turned. He says that proof is building. And he puts private equity at the center of it.

The immediate consequence is simple. Advisers, lenders and corporate acquirers now have a public marker from one of the world's biggest law firms that the back half of 2026 should be stronger than the first, with sponsors keeping the pace, according to reports.

Background

The M&A market has spent the past two years trying to recover from a bruising stretch of higher borrowing costs, slower financing, tougher antitrust review and valuation gaps between buyers and sellers. Those forces didn't kill deals. They shrank the field to the biggest, cleanest transactions and to buyers with the confidence and capital to move anyway. That's why Kelly's emphasis on mega deals matters. Large transactions have become the clearest signal of risk appetite returning.

Private equity sits right in the middle of that shift. Buyout firms have dry powder to invest, aging portfolio companies to sell and every incentive to restart exits after a slow period. They don't need a perfect backdrop. They need workable debt markets, steadier pricing and boards willing to transact. That's the opening Kelly is pointing to. It fits with a broader market mood that has been leaning back toward risk assets even as consumers still feel squeezed by prices, as BreakWire reported in Duke Says Inflation Still Outruns Household Pay.

There is also a legal and financing angle here. Latham & Watkins advises on many of the world's largest transactions, so its senior dealmakers usually see pipeline activity before it shows up in the completed-deals data tracked by firms such as the Reuters deals report and market databases. That doesn't make every forecast right. But it does mean Kelly's view is rooted in mandates, conversations and financing work already moving through the system.

What this means

The first conclusion is that scale will keep winning. If mega deals are leading the rebound, then the firms best placed for the next leg up are the bulge-bracket banks, elite law firms and private credit lenders that can underwrite complexity and speed. Smaller advisers get scraps when the market narrows like this. The result: fee pools concentrate fast, and the largest sponsors gain even more leverage over auction processes and financing terms.

The second is that private equity isn't waiting for ideal conditions anymore. Sponsors held back when rates jumped and exits froze. That changed when financing markets reopened enough to support larger buyouts and sales. If Kelly is right, the industry has decided the cost of waiting now exceeds the cost of doing deals. That's a hard pivot. It also means more carve-outs, secondary buyouts and public-to-private attempts will show up if the debt stays available. Investors already primed for risk by stories such as SpaceX IPO Forces Its Way Into Portfolios won't be shocked by that.

There is a catch. A rebound led by mega deals can flatter the headline numbers while leaving the middle market uneven. A handful of outsized transactions can make the whole market look healthy even if many smaller companies still can't agree on price or secure financing on acceptable terms. But that's still a real recovery. M&A doesn't restart evenly. It starts at the top, where capital is deepest and conviction is strongest.

And there is a policy backdrop. Antitrust enforcement, disclosure demands and cross-border reviews still shape what gets signed and what gets blocked, according to the Federal Trade Commission and the U.S. Justice Department's antitrust division. Yet the market has adjusted. Buyers now structure around regulatory risk earlier, and advisers price delays into timetables from day one. That's why forecasts like Kelly's carry weight now. They imply the market has learned to transact through the friction rather than wait for Washington to clear the road.

M&A doesn't restart evenly. It starts at the top, where capital is deepest and conviction is strongest.

The broader market read-through is straightforward. More sponsor-led deals mean more demand for acquisition financing, more pressure on corporations to pursue strategic combinations and more urgency for rivals that don't want to be left behind. That ripples into credit, equities and even commodities when industry consolidation reshapes supply chains. We've already seen how fast markets respond to concentrated risk and capital flows in sectors like energy in Oil Rises After Trump Threatens Iran Again and in corporate expansion bets such as Chevron backs Argentina shale liquids supply venture.

Still, this forecast is less about optimism than about backlog. Private equity firms need realizations. Limited partners want distributions. Corporate boards need growth they can't find organically. And advisers need the pipeline to convert. Those pressures don't disappear. They force action.

For Europe and the U.K., the logic is similar even if the politics differ. Cross-border confidence improves when dealmakers believe execution risk is manageable, and that calculation has become more central as companies weigh regulatory boundaries and market access, a debate that also runs through Britain's post-Brexit corporate strategy discussed in Campbell and Rees-Mogg Debate UK-EU Ties. The legal architecture matters. But capital usually moves first.

What to watch next is the second-half pipeline itself: announced buyouts, sales by private equity owners and the size of financing packages attached to them. The next clear test will come as 2026 progresses and law firms, banks and sponsors either confirm Kelly's call with signed transactions or fail to turn talk into volume. That's the date line that matters now.