Private equity sponsors could boost M&A activity, Goldman Sachs says

Goldman Sachs has indicated that private equity firms are likely to increase M&A activity and asset sales as they face growing pressure to return capital to investors. The investment bank’s comments, made during a recent financial industry conference in Florida, suggest that sponsor-led transactions could accelerate in 2026 according to Reuters.

The bank noted that private equity sponsors often must distribute profits to their limited partners, prompting them to consider divestitures or public offerings. This trend may not only influence financial sponsors’ decisions but also create opportunities for corporations looking for strategic acquisitions.

Goldman Sachs has been involved in high-profile deals that illustrate this dynamic, including the $55 billion leveraged buyout of Electronic Arts and the $32 billion acquisition of cybersecurity firm Wiz. These transactions underscore the scale of sponsor-driven activity and the advisory role investment banks play in facilitating large deals.

Key drivers behind M&A activity

Private equity firms typically operate with fixed-term funds that require generating returns for investors within a set period. When capital must be returned, sponsors often feel compelled to sell or restructure holdings. This need to meet investor expectations can increase deal-making activity, even if market conditions are less than optimal.

The resulting transactions can take several forms. Some portfolio companies may be sold to other investors or strategic buyers, while others could be taken public through initial public offerings (IPOs). According to Goldman Sachs, both M&A and public market exits are expected to benefit from this sponsor-driven pressure.

Recent examples, such as the Electronic Arts and Wiz deals, demonstrate how banks like Goldman Sachs facilitate complex transactions. These advisory services guide both private equity sponsors and strategic buyers through negotiations, financing, and regulatory considerations, ensuring deals can be executed efficiently.

Background on M&A activity in private equity

Private equity firms invest in companies using a combination of equity and borrowed capital, seeking to improve performance before exiting the investment. When investor expectations shift or funds reach maturity, sponsors may accelerate divestment to meet obligations.

The M&A market has shown resilience in recent years, with large-scale transactions continuing despite macroeconomic uncertainty. Deals such as the leveraged buyout of Electronic Arts and the Wiz acquisition illustrate the capacity for substantial transactions to close when conditions align.

Investment banks, positioned as key advisors, help navigate these transactions by structuring deals, securing financing, and ensuring regulatory compliance. Their involvement becomes particularly important when private equity sponsors are under time pressure to return capital.

Pressure on private equity firms to deliver returns could unlock a wave of deal-making in 2026, spanning both sponsor-driven exits and traditional corporate acquisitions. Goldman Sachs’ commentary and its role in major recent deals highlight how financial sponsors and advisory banks together can shape the M&A landscape. As a result, market participants can expect a potentially higher volume of strategic acquisitions and asset sales, reflecting the combined influence of investor demands and ongoing corporate growth strategies.