Global Investment Banks See Early Signs of Deal Activity Picking Up in Q2

After a slow start to the year, global investment banks are beginning to observe early signs that deal activity is stabilizing and gradually increasing as the second quarter gets underway. While volumes remain below historical post-pandemic peaks, client engagement has reportedly risen across mergers and acquisitions, capital markets advisory, and selective financing transactions. Analysts suggest that the renewed activity could mark the beginning of a cautious, selective recovery in corporate dealmaking.

The first quarter of the year was characterized by heightened uncertainty. Geopolitical tensions, shifts in interest-rate expectations, and uneven equity market performance led many corporate boards to delay strategic decisions. Companies and investors alike adopted a wait-and-see approach, preferring to pause significant transactions until market signals became clearer. As volatility has eased and financing conditions stabilized, discussions that were previously deferred are now resurfacing, fueling renewed optimism among market participants.

Mid-sized M&A deals, carve-outs, and bolt-on acquisitions are showing particular momentum across sectors such as technology services, healthcare, industrials, and energy transition infrastructure. In technology, firms are increasingly pursuing acquisitions to gain intellectual property, expand regional presence, or enhance digital capabilities. Healthcare companies are exploring strategic partnerships and acquisitions to diversify offerings or strengthen supply chains, while industrial and energy firms are focused on operational efficiency and sustainability initiatives.

Corporate balance sheets remain relatively strong, particularly among investment-grade issuers that benefited from low borrowing costs in prior years. This financial flexibility is giving management teams the capacity to pursue strategic transactions without over-leveraging, even amid ongoing macroeconomic uncertainties. Analysts note that access to liquidity is a critical factor underpinning the selective rebound in deal activity.

Interest-rate clarity has emerged as a key driver for renewed market activity. Expectations that central banks may be nearing the peak of their policy rates have reduced uncertainty in modeling transactions and financing structures. Credit markets have also become more accommodating for high-quality borrowers, with syndicated loans clearing more efficiently and spreads tightening in investment-grade debt markets. These developments improve the economics of leveraged acquisitions and facilitate a wider range of financing options for strategic deals.

Equity markets, while still sensitive to news in macroeconomics, have shown improved depth for secondary offerings and structured equity solutions. Companies are increasingly exploring staged investments, minority stake sales, and joint ventures that limit upfront risk while maintaining strategic flexibility. This approach allows firms to navigate uncertainty while gradually executing growth plans.

Despite these positive signs, activity remains selective. Investors and boards are focused on assets with clear strategic rationale, defensible cash flows, and disciplined pricing. Large, transformational mergers continue to be rare, as regulatory scrutiny of market concentration and antitrust considerations remains stringent. As a result, most current deal flow is concentrated in mid-sized, private-to-private, and cross-border transactions, particularly where valuation or currency considerations create opportunities.

For global investment banks, even a modest pickup in deal flow can have a significant impact on advisory revenues, particularly after several challenging quarters. Firms that restructured teams and reduced costs during slower periods are now positioned to capitalize on incremental deal volume. Emphasis on sector specialization, cross-border capabilities, and advisory expertise has become critical as clients navigate regulatory complexity, geopolitical risks, and evolving supply chains.

Early indicators suggest that the second quarter could mark an inflection point. Announced deal volumes are trending higher than in the previous quarter, though activity remains far from the peaks observed in 2021. Sustained momentum will depend on continued macro stability, interest-rate clarity, and resilient corporate earnings. Any renewed spike in market volatility could delay transactions once again, but overall sentiment among dealmakers appears cautiously optimistic.

Looking ahead, selective activity is likely to persist. Boards and investors are expected to prioritize strategic alignment and long-term value creation over short-term opportunism. Mid-sized deals, sector-specific acquisitions, and targeted cross-border transactions will remain the focus, while transformational mergers and large-scale IPO-driven activity may take longer to return. Nonetheless, current trends suggest that global dealmaking has found a tentative floor and is beginning to show signs of recovery, offering opportunities for both companies and advisors to engage strategically in the months ahead.