Key Points
- Goldman Sachs expects M&A activity to rise by 15% in 2026.
- More than $5 trillion in corporate cash and private equity capital is waiting to be deployed.
- AI, infrastructure, energy, semiconductors, and adjacent sectors are likely to see increased buyer interest.
- Business owners should decide now whether they want to sell, acquire, or stay independent.
- The biggest mistake may be waiting too long while this deal cycle is still active.
Goldman Sachs released their 2026 M&A outlook, and the headline is direct: deal volume is about to accelerate. They are calling for a 15% increase in M&A activity compared to 2025, driven by two forces that are now impossible to ignore. One is artificial intelligence and the infrastructure required to power it. The other is the simple fact that companies have capital sitting on the sidelines that needs to be deployed.
If you are running a business in the $5M to $50M revenue range and you have been thinking about what happens next for your company, this market shift matters more than you might think.
Where the Capital Is Sitting
The numbers are significant. There are roughly $3 trillion in corporate cash reserves across American companies right now. Private equity firms are sitting on approximately $2 trillion in dry powder that has been waiting for the right moment to get invested. That is $5 trillion in capital looking for a home, and according to Goldman, we are entering the part of the cycle where that capital starts moving into deals.
The hyperscalers, including Amazon, Google, Microsoft, and Meta, are spending approximately $760 million every single day on capital expenditures. That number has not come down. It is the kind of spending that creates demand for companies throughout the entire supply chain, from semiconductors to data centers to the real estate and energy infrastructure that supports all of it.
When you have that much capital and that much strategic demand sitting in the same market, M&A activity follows. That is not speculation. That is how the cycle has always worked.
Who This Affects
If your business operates in software, managed services, energy infrastructure, semiconductors, or anything adjacent to the AI stack, expect to see a meaningful increase in attention from both strategic buyers and private equity. The most recent comparable was the AES deal, a $33 billion infrastructure transaction led by a PE consortium focused on grid modernization and clean energy. When deals that size start moving, the capital is really flowing.
Goldman also found that 51% of CEOs believe access to private capital will significantly impact their M&A strategy in 2026. That is a dramatic shift from the cautious tone you heard from most executives just a year or two ago.
Three Scenarios Worth Thinking Through
Depending on where you are in your business journey, this environment means something different. Here is how to think about each scenario:
If you are thinking about growth through acquisition:
This is probably the best environment you are going to see. Capital is available, financing is open, and if there is a target in your space that makes strategic sense, valuations are not going to get more attractive than they are right now.
If you think your company might be an acquisition target:
Expect inbound interest to accelerate. Buyers are actively looking for platforms and add-ons to roll up, especially if you are adjacent to infrastructure, energy, semiconductors, or enterprise software. That interest will likely pick up meaningfully in the second and third quarters.
If you are planning to stay independent and grow organically:
Go in with your eyes open. Companies that scale through acquisition now will carry structural advantages, including better margins from shared overhead, easier access to capital for innovation, and stronger negotiating power with customers. Staying independent is a valid choice, but it becomes a more deliberate one in this environment.
What You Should Actually Do About It
Most of this comes down to clarity on what you want the next three to five years to look like. The action steps are straightforward:
- If a sale was always part of the plan, this is your moment. The buyers are there, they are moving, and valuations are generally favorable.
- If you want to grow and see acquisition as part of that strategy, the capital and appetite for deals are both present.
- If you want to stay independent, make sure you are doing it for the right reasons, not simply because you did not consider the alternative.
The real mistake is sitting still and waiting to see what happens. Deal cycles like this do not last forever. Capital gets deployed, multiples adjust, and then you are waiting for the next cycle.
The Macro Backdrop
This outlook assumes that financing markets stay reasonably open and that the economic backdrop holds. Both appear reasonable right now, but they depend on conditions remaining relatively stable. If interest rates spike significantly or unexpected recession fears emerge, the $2 trillion in private equity dry powder could sit idle longer. For now, the assumption is that capital allocators need to deploy, and that timing is favorable for business owners thinking strategically.
Whether you are thinking about a move or simply paying attention to your market, understand the moment. It is a seller-friendly environment for at least the next couple of years.
Pro Tip: If a sale or acquisition is part of your plan, the best time to begin positioning your business is 18 to 24 months before you intend to act. The financial preparation, deal team assembly, and buyer positioning all take time. Starting early is what allows you to take advantage of a market like this one.
Ready to Understand What This Market Means for Your Business?
Our team works directly with business owners in the $5M to $50M revenue range on exit planning, financial readiness, and positioning for a sale. If you want to think through what this M&A environment means for your situation, reach out to start the conversation. southcoastfp.com/insights
