What's happened
Major banks anticipate a busy 2026 with the second-largest M&A year in history, driven by strong deal activity and competitive talent markets. Goldman Sachs and others are investing heavily in top talent and new divisions to capitalize on the booming market, despite recent regulatory slowdowns.
What's behind the headline?
The outlook for 2026 indicates a sustained boom in M&A activity, with banks like Goldman Sachs preparing to leverage this momentum. The industry’s focus on talent retention and strategic expansion, such as Goldman’s Capital Solutions Group, underscores a belief that market conditions will remain favorable. However, regulatory delays caused by government shutdowns have temporarily slowed equity offerings, which could pose a risk if political or economic uncertainties increase. The projected bonus increases—up to 15% for M&A bankers and 25% for traders—highlight the intense competition for top performers, which will likely drive up costs for banks but also reinforce their market dominance. This environment suggests a potential 'golden age' for dealmaking, but it also raises questions about sustainability if market conditions shift or regulatory pressures intensify.
What the papers say
Reed Alexander of Business Insider UK reports that Goldman Sachs expects 2026 to be the second biggest year in history for M&A, with deal activity already exceeding a trillion dollars this year. The firm is investing heavily in retaining top talent, emphasizing a pay-for-performance culture. Meanwhile, Sky News’s Mark Kleinman highlights that London-based International Connections Group (ICG) is planning an IPO, reflecting broader confidence in London's financial markets. Additionally, Providence Equity Partners is exploring a sale of CloserStill Media, valued at around a350m, indicating ongoing consolidation and investment activity in the events and advertising sectors. These stories collectively illustrate a vibrant, competitive financial landscape driven by high deal volumes and strategic expansions, despite some regulatory headwinds.
How we got here
The banking industry has seen a resurgence in dealmaking after years of sluggish activity, with recent earnings reports showing significant growth in advisory revenues. This rebound is driven by optimistic market conditions and increased corporate activity, prompting banks to compete fiercely for top dealmakers and expand their capabilities.
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