EY-Parthenon Shows Diverging M&A Outcomes for Corporate and PE Buyers

Why It Matters

The split outlook reshapes capital flows, prompting corporates to accelerate strategic buyouts while PE firms defer investments, influencing deal‑making dynamics and valuation benchmarks across the market.

Key Takeaways

• Corporate M&A projected to grow 11% in 2026, total volume up 8%
• Private‑equity deal volume expected to stay flat after Q1 dip
• AI uncertainty slows PE interest in software acquisitions
• Corporates prioritize speed to acquire tech, avoiding in‑house development
• 32,000 unsold PE portfolio companies equal roughly $3.8 trillion in value

Pulse Analysis

The EY‑Parthenon 2026 M&A outlook paints a cautiously optimistic picture for U.S. dealmaking despite geopolitical turbulence and higher borrowing costs. By year‑end, total transaction volume is expected to rise about 8%, driven primarily by corporate buyers who are projected to increase activity by 11%. Executives cite an urgent need to secure emerging technologies—especially in artificial intelligence, cloud, and cybersecurity—rather than build capabilities internally. This “speed‑to‑market” mindset reflects a competitive arms race where waiting for ideal conditions could cede advantage to rivals.

Private‑equity firms, by contrast, appear less pressured to chase new targets. EY‑Parthenon notes a flat‑line outlook after a first‑quarter decline of 11%, while Bain estimates roughly 32,000 portfolio companies—about $3.8 trillion in assets—remain unsold worldwide. The slowdown is partly attributed to uncertainty around AI’s impact on software businesses, a sector that has been a hot ticket for PE over the past three years. Investors are now adopting a “wait‑and‑see” posture, extending hold periods to avoid overpaying for assets whose future cash flows may be disrupted.

The divergent trajectories signal a reshaping of capital allocation across the deal market. Corporations are likely to accelerate strategic buyouts, creating opportunities for boutique advisory firms and tech‑focused target companies. Meanwhile, the PE sector may see increased secondary‑market activity as firms look to liquidate portions of their oversized portfolios. For investors, the key risk lies in timing: entering corporate‑driven deals too early could expose them to integration challenges, while waiting on PE exits may lock up capital amid a prolonged inventory of unsold assets. Monitoring AI adoption curves will be essential to gauge where the next wave of value creation emerges.