NextFin News - Melissa Sawyer’s message on M&A is straightforward: the market’s real test is not whether one or two headline deals get done, but whether volume stays strong enough to show the cycle is genuinely rebuilding. Sawyer, Sullivan & Cromwell’s Global Head of M&A, said volume is the clearest marker, arguing that stronger IPO activity and a calmer regulatory tone can help sponsors exit portfolio companies and feed new dealmaking back into the system.
That framing matters because M&A is not powered only by large strategic acquisitions. It depends on whether private equity firms can sell assets, whether boards feel comfortable launching processes, and whether financing and policy conditions are predictable enough for transactions to close. When those pieces move together, deal volume can accelerate even if the broader macro backdrop still looks uneven.
In a February 2026 appearance tied to Bloomberg Deals, Sawyer said: “I think volume is going to be the real marker.” She added: “Once we see sponsors feel like they can go back into the market and exit their portfolio companies … I think it will trigger an outpouring of M&A as well.” She also said: “A lot of the change is just at the level of rhetoric, but even toning down the rhetoric has helped a lot to restore confidence in companies that are considering transacting.”
The broader outlook from investment banks and advisers supports that read. Goldman Sachs’ 2026 Global M&A Outlook said the second half of 2025 proved stronger than expected and that the foundational drivers entering 2026 remain robust and encouraging. The report points to AI-driven portfolio shifts, abundant public and private capital, and strategic repositioning as forces keeping the market active. It also says private markets are central to global M&A and that larger, more complex transactions are becoming more common.
That combination makes volume more meaningful than headline value. A market can generate a few oversized transactions and still leave sponsors stuck, if exits are scarce and capital cannot recycle. A market with healthy volume, by contrast, is one where deals can move from concept to signing to closing often enough to keep advisers, lenders, and corporate boards engaged.
Sawyer’s emphasis on IPOs is especially important. A functioning listing window gives sponsors an exit route for mature companies, and those exits often become the raw material for the next wave of acquisitions. When the IPO market is open, sponsor capital can flow back into buyouts, add-ons, and carve-outs instead of sitting on the sidelines.
Goldman Sachs’ outlook reinforces the same mechanism. Its view that private markets have become central to global M&A reflects a simple reality: the sponsor ecosystem is no longer a side story. It is one of the engines of the cycle. If exits improve, capital is returned. If capital is returned, sponsors can redeploy it. If redeployment happens, volume can keep building.
Why Deal Volume Matters More Than Deal Value
Volume is the better measure of whether M&A is truly healthy because it captures the market’s breadth, not just its size at the top end. A handful of large transactions can make a quarter look active, but they do not necessarily prove that the market has regained depth. What matters for durability is whether a wider range of deals can get financed, negotiated, approved, and closed.
That is particularly true in private equity. Sponsors need exits to support returns, recycle capital, and create room for new deployments. If the exit market is weak, firms may still hold valuable assets, but the broader transaction cycle slows. A stronger IPO window is therefore not just about public listings. It is a pressure-release valve for the whole private-market ecosystem.
Goldman Sachs’ outlook points in the same direction when it highlights portfolio repositioning and larger, more complex transactions. Those deals often require carefully timed financing and significant execution work, which makes a steady flow of transactions more important than any single announcement. If more processes can be started and completed, the market is functioning; if only isolated deals clear, the market is still partially blocked.
That is why Sawyer’s benchmark is useful. It moves attention away from the spectacle of one-off megadeals and toward the cadence of activity that determines whether the market can sustain itself. If volume is rising, that usually means more boards are willing to transact, more sponsors are ready to sell, and more buyers believe pricing and financing are workable.
The report’s note that activist campaign volumes are nearing a five-year high adds another layer. Activists tend to press companies to sharpen strategy, separate businesses, or pursue sales when they believe value is trapped. That pressure can increase transaction flow even when the broader market is cautious, because it forces management teams to respond.
The Regulatory Tone Still Shapes the Pipeline
Sawyer’s point about rhetoric is not cosmetic. M&A decisions often start with boardroom judgment, and judgment changes when the environment feels more predictable. Even if valuations are attractive, a harsh or uncertain policy climate can delay a process, reduce appetite for risk, and keep sellers and buyers on the sidelines.
Her comment that toning down the rhetoric has helped restore confidence is consistent with how the market restarts after a cautious period. Sentiment improves first. Then boards begin to explore options. Then advisers bring more mandates to market. Only after that do completed transactions rise in a sustained way. The tone of the discussion therefore matters long before the first deal closes.
Goldman Sachs’ outlook is again in line with that sequence. It describes a market shaped by strategic repositioning and broad capital availability, but also by policy uncertainty that can influence timing and structure. The more predictable the environment, the more likely companies are to launch divestitures, mergers, and add-on acquisitions that would otherwise stay on the shelf.
“A lot of the change is just at the level of rhetoric, but even toning down the rhetoric has helped a lot to restore confidence in companies that are considering transacting.”
That is the practical link between sentiment and volume. The market does not need perfect clarity to function, but it does need enough predictability that management teams believe a process is worth starting. Once that threshold is crossed, the pipeline can widen quickly.
AI and Private Markets Are Still Feeding the Cycle
The constructive part of the outlook is that M&A is being supported by more than a simple cyclical rebound. Goldman Sachs says AI is driving innovation across software, data centers, semiconductors, real estate, power, and transmission. That matters because AI is not just prompting one kind of transaction; it is creating several layers of strategic demand at once.
Companies may buy capabilities instead of building them. Infrastructure providers may pursue consolidation to scale up capacity. Capital providers may back assets tied to compute, energy, or digital infrastructure because the long-term demand profile looks more durable. Each of those forces can lift transaction volume, even if the economics and structures differ across sectors.
Private markets add a second engine. Goldman Sachs says they have become central to global M&A, which reflects the size and importance of sponsor activity in the current cycle. If exits improve, sponsors can return money to investors and redeploy capital. If financing remains available, they can structure larger and more complex transactions. If strategic buyers remain active, sponsors get more options for monetizing assets.
That is the real reason Sawyer’s volume test matters. A market that supports a steady sequence of exits, acquisitions, and carve-outs looks much healthier than one that depends on occasional trophy deals. The former suggests a functioning ecosystem; the latter suggests that the market is still waiting for a full thaw.
Goldman Sachs’ note that activist volumes are near a five-year high also reinforces the case for sustained deal activity. Activism often forces strategy decisions into the open, and those decisions can lead to sales, separations, or mergers. Even when activists are not the main driver, they raise the pressure on management teams to justify why an asset should remain inside the company.
“Once we see sponsors feel like they can go back into the market and exit their portfolio companies … I think it will trigger an outpouring of M&A as well.”
That is the cleanest expression of the deal cycle Sawyer is watching. The market does not need every condition to be perfect. It needs enough exits to make the next wave of transactions possible.
What Would Confirm the Second-Half Thesis
The clearest confirmation would be a broader rise in announced and completed transactions across sponsor-led, strategic, and carve-out deals. If that happens, it would suggest the market is not just producing occasional headline deals but is actually regaining depth. A healthier IPO window would reinforce that pattern by giving sponsors another route to monetize mature assets.
Another sign would be more boards shifting from waiting to acting. If companies keep launching processes instead of postponing them, that would imply the regulatory tone and capital-market backdrop are genuinely improving decision-making. It would also suggest that volume is rising because more participants believe deals can clear, not because a few sectors are unusually hot.
The risk case remains clear. If the IPO market stalls, if financing tightens, or if policy uncertainty rises again, M&A could slip back into a pattern where only the most compelling deals proceed. In that situation, value might still hold up in isolated transactions, but the broader volume test Sawyer highlighted would remain unmet.
For now, the weight of evidence points toward a firmer second half. AI-driven restructuring, private-market capital, sponsor exits, and a calmer tone all give the market a credible foundation. The key question is whether those forces translate into a steady cadence of completed deals, not just a short burst of activity.
NextFin News - If Sawyer’s call proves right, the strongest sign of recovery will not be a single blockbuster. It will be a market that keeps producing deals week after week.
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