6 7 Finance Monthly. Finance Monthly. Markets & Deals Analysis Markets & Deals Analysis BUT CONTROL HAS REPLACED CONFIDENCE CAPITAL IS AVAILABLE Entering 2026, global dealmaking is no longer defined by the absence of capital, nor by the urgency that characterised earlier cycles. Instead, it is being shaped by a more measured convergence of stabilising — yet uneven — forces. Inflation across the UK, US and Europe is easing. Interest rates have begun to drift lower. Credit markets are open. But confidence remains conditional. Central banks have made it clear that the ultra-low-rate era that underpinned a decade of leverage-driven expansion is unlikely to return. Policy rates remain high enough to influence valuation discipline, leverage tolerance and deal structure, particularly in capital-intensive sectors. For boards and sponsors alike, this has reinforced a renewed emphasis on downside protection, funding certainty and assets with visible, defensible cash flows. As a result, capital is flowing — but it is flowing selectively. Across banking, infrastructure, energy, healthcare, services and technology, the transactions moving forward share common characteristics. They prioritise scale, capability and control over speed. They favour platforms, consolidation and strategic adjacency rather than speculative growth. And they are increasingly structured to withstand scrutiny, stress and longer holding periods. This is not a stalled market. It is a recalibrated one. RATES AND CREDIT: Open Markets, Narrower Tolerance Credit conditions entering 2026 are broadly supportive, but unevenly distributed. Large corporates and sponsorbacked platforms with strong earnings visibility continue to access financing without material difficulty. By contrast, smaller, weaker-performing or highly cyclical businesses face tighter underwriting, higher equity requirements and more conservative leverage assumptions. Importantly, subdued borrowing appetite is not driven by a lack of available capital. It reflects a strategic choice by many businesses to prioritise balance-sheet repair, operational resilience and margin protection over aggressive expansion. This dynamic has favoured addon acquisitions, platform extensions and structured transactions over highly levered, transformational deals. Private credit remains a central feature of the financing landscape. Sponsors continue to value its speed, certainty and flexibility, particularly where syndicated markets remain sensitive to volatility or regulatory capital constraints limit bank appetite. However, intensifying competition among private lenders is compressing spreads and, in some cases, loosening protections — placing greater emphasis on asset quality, governance and manager discipline. At the same time, increased regulatory attention on private markets, particularly around valuation practices and systemic interconnectedness, is adding complexity to deal execution. Financing remains available, but the margin for error has narrowed. CAPITAL DEPLOYMENT: Dry Powder, With Conditions Attached Private equity capital remains abundant, but it is not uniformly deployable. Much of the current activity is being driven by older fund vintages facing deployment and exit pressures, particularly through platform consolidation and disciplined buy-and-build strategies. These sponsors are prioritising transactions that can be executed with operational certainty and clear value-creation levers. Newer funds are proceeding more cautiously. Higher entry multiples, increased financing costs and longer hold assumptions are forcing a reassessment of return expectations. In many cases, this has shifted strategy away from headline growth toward margin expansion, integration, pricing power and scale efficiencies. Strategic buyers are also re-emerging — quietly and selectively. Public companies are using M&A to reinforce competitive positioning, secure infrastructure and accelerate capability build-out rather than pursue transformational growth. Stock-for-stock mergers, targeted bolt-ons and technology acquisitions are increasingly preferred over debt-heavy cash transactions. Across both sponsor and corporate activity, the recalibration is clear. Capital is available, but conviction must be earned. CROSS-BORDER DEAL FLOW: Selective, Not Dormant Cross-border transactions continue, but they are more tightly filtered than in previous cycles. Geopolitical tension, sanctions regimes, trade policy uncertainty and divergent regulatory approaches are now embedded into transaction planning from the outset. Deals involving infrastructure, energy, technology and financial services face longer timelines, heightened scrutiny and more complex approval processes. As a result, international transactions that do proceed tend to involve established platforms, experienced sponsors and jurisdictions with regulatory familiarity. European infrastructure, energy transition assets, digital platforms, healthcare services and selected financial services businesses continue to attract international interest — particularly where regulatory frameworks are clear and long-term demand is resilient. Opportunistic expansion has largely given way to deliberate, wellstructured entry strategies. Tax and regulatory considerations are playing a more prominent role in deal structuring. Governments are seeking to balance growth objectives with fiscal constraints, leading to targeted reform rather than wholesale deregulation. For dealmakers, this has elevated the importance of jurisdictional planning, early regulatory engagement and robust governance frameworks. WHAT THIS SIGNALS FOR THE YEAR AHEAD The defining feature of the current market is not volume. It is intentionality. Deals are being done, but they are designed to endure. Capital is flowing toward assets that offer scale, resilience and strategic relevance. Execution certainty has become a competitive advantage, and structure now matters as much as headline valuation. For Finance Monthly readers — investors, advisers, executives and policymakers — this shift is critical. Understanding why capital is moving, how transactions are being structured and what risks are being consciously avoided is more valuable than tracking deal counts alone. 2026 is shaping up not as a year of exuberance, but as a year of considered control. The transactions featured in this issue are early markers of a market that is adapting — not retreating — and one where discipline, not momentum, defines success.
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