Go ahead, make me an offer!

Corporate deal-making springs to life in a big way

We’ve been watching the M&A market closely, and there has been a lot to pay attention to. Total deal value in Q1 hit $1.2 trillion, that’s a 27% year-over-year increase and the strongest start to a year since 2021. But here’s what’s really interesting: The number of deals actually fell 15%, to roughly 11,400 transactions, an 11-year low. More money. Fewer deals. Strange…maybe not.

There is a clear narrative behind these numbers. What’s going on here is concentration. Q1 saw 22 transactions worth more than $10 billion each, totaling nearly $500 billion, a 47% jump year-over-year and the strongest mega-deal quarter on record. What better way to classify this than our favorite letter – let us call it the K-shaped M&A market. In this environment, deal counts are shrinking, deal values are surging. Full-year 2026 M&A is now projected at $5.4 trillion, up sharply from $3.77 trillion in 2025.

Now your next question may be what’s driving this dynamic? I was at least taught that markets do not cater to Alphabet Aerobics. Well, it comes down to three major factors: AI (you knew it was coming), a stabilizing rate environment, and a U.S. regulatory backdrop that’s more deal-friendly than it’s been in years. Oh, and we should also mention private equity is back in the mix too, sponsor-backed M&A hit a record $320 billion in Q1, up 41% year-over-year.

I got a feeling – somebody’s watching these deals

A few transactions from the past couple of weeks that caught our eye.

First of all, Tilman Fertitta, the owner of the Houston Rockets, the Golden Nugget, and seemingly half of Houston’s restaurants, is buying Caesars Entertainment for roughly $5.7 billion. Now, despite its prominence on the Vegas strip as well as in the movie The Hangover, Caesars had been struggling: Its stock was down about 40% in the year before takeover interest first surfaced in February. Adding 52 casinos and resorts to Fertitta’s portfolio is a big swing, but also a rare chance to buy a marquee brand at a discount and fold it into a bigger ecosystem.

Second, Barry Diller’s People Inc. made a $12.4 billion offer for MGM Resorts, a company where it already holds a 26.1% stake. Diller’s pitch to shareholders: MGM owns 40% of the Las Vegas Strip, which is iconic, irreplaceable real estate. Pair that with digital media and you have, in his words, a “perfect hedge in a world that is changing so unpredictively fast.”

Then there’s Berkshire Hathaway agreeing to buy homebuilder Taylor Morrison for $6.8 billion, which certainly deserves some attention. Most importantly to highlight is that this was Greg Abel’s first major deal as Berkshire’s leader, and Buffett made a point of staying out of it. “I never talked to the CEO,” he told CNBC. “He has launched.”

The thesis behind the transaction is as follows: Taylor Morrison did $7.8 billion in revenue last year with nearly 13,000 home closings. Abel plans to combine it with Clayton Homes into a unified residential platform. Analysts called it a vote of confidence in the long-term outlook for homebuilding, and the U.S. housing market is still estimated to be underbuilt by roughly 7 million units. It’s also worth flagging that Berkshire isn’t alone in this view; Tokyo-based Sumitomo Forestry recently closed a $4.5 billion deal for Nevada homebuilder Tri Pointe. Adding to the influx of transactions in the market.

What now?

The backdrop for deals remains constructive: Capital is abundant, management teams are getting more comfortable transacting, and there’s a growing sense of urgency to move while the regulatory window is open. That said, Q2 has thrown a lot at markets. Geopolitical tensions, particularly around the U.S.-Israel-Iran situation have introduced volatility and likely caused some larger cross-border deals to pause. If visibility improves and de-escalation continues, there could be potential for pent-up activity to accelerate fast. But only time will tell.

For the rest of 2026, we are keeping our eye on a few themes: AI-driven consolidation, financial services M&A picking up, and whether the private-public valuation gap, where private sellers are still anchoring to 2021 peak prices, finally closes. When it does, the deal pipeline behind it could be substantial.

And then there’s the other side of the story that’s also been building gradually, then suddenly. The IPO market is heating up, SpaceX. Anthropic. OpenAI. The IPO market may finally be open for business and there is a lot to examine there…but that’s for another time.

Laura Baker is Associate Client Portfolio Manager, Equities at PenderFund Capital Management. She writes in Pender Pulse Substack. Used with permission.

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