Leveraged finance bankers, after a period of anticipation, are increasingly optimistic about a resurgence in mergers and acquisitions. This optimism is reflected in substantial underwriting activity, with banks committing to approximately $US65 billion ($98.5 billion) of debt tied to leveraged buyouts for 2026, according to Bloomberg calculations. These commitments are fuelling expectations for one of the strongest years for M&A activity in the current decade, contingent on stable market conditions that allow banks to successfully sell these commitments to investors.
The potential rewards for correctly predicting the market are significant. Successful deals would translate into substantial fees, representing some of the most lucrative opportunities in investment banking. However, the stakes are high, with the risk of repeating the considerable losses experienced in 2022 if market conditions deteriorate.
Alex Robb, a finance partner at Ropes & Gray, notes the importance of leveraged buyout financings in driving the broadly syndicated loan (BSL) market in 2026. According to Robb, the success of this pipeline depends significantly on the market’s resilience. Any significant volatility could pose challenges to syndication efforts and overall pricing, potentially disrupting the anticipated surge in M&A activity.
One of the most anticipated mega-deals expected next year is the $US20 billion financing supporting the acquisition of video game maker Electronic Arts. This represents the largest buyout debt commitment on record. Banks involved in taking Electronic Arts private are projected to earn around $US500 million in fees from this single transaction alone, which is expected to occur in the first half of 2026.
