Core Insights - M&A activity has rebounded in 2025, with 10,333 deals valued at $1.6 trillion, marking a 45% increase in total deal value from the previous year, the second-highest ever recorded [1][4] - The AI boom and revitalized private equity (PE) activity are significant drivers of this growth, particularly in the technology sector, where 74 megadeals (valued at $5 billion or more) were recorded, with over 20% driven by AI [4][5] - PE deal volume increased by 4% to 1,484 transactions, while M&A value surged by 54% to $536 billion [5] Middle Market Trends - The middle market has seen a decline in M&A activity, projected to reach a decade low with only 496 deals, impacted by macroeconomic factors [6] - Despite this slump, PE firms are increasingly targeting the middle market for opportunities, although challenges related to valuation gaps remain [6] Future Outlook - Looking ahead to 2026, there is a mix of pressure and momentum, with potential opportunities arising from interest rates, AI development, and energy infrastructure [7] - PwC anticipates that if trade policy stabilizes and interest rates decrease, the M&A market could build on the gains made in 2025, encouraging both middle-market corporates and PE firms to re-enter the M&A space [9]