The “wait and see” era is over. The “forced to sell” era has begun.
Speaking at the UBS Financial Services Conference on Tuesday, Goldman Sachs (GS) CEO David Solomon delivered a blunt assessment of the private equity landscape: Financial sponsors are under increasing pressure to return capital to Limited Partners (LPs) before they can raise fresh funds.
🔓 THE SPONSOR SQUEEZE:
- The Catalyst: After years of holding assets to wait for better valuations, the clock has run out. Sponsors need to show distributions (DPI) to validate their next vintage.
- The Shift: Solomon noted, “Valuation for companies they want to sell is becoming less important… Whether they’re going to the M&A market or they’re getting stuff public, they’ve got to return more capital.”
📈 THE STRATEGIC BOOM: It’s not just PE; Corporate M&A is entering a new gear.
- Outlook: Solomon predicts strategic M&A activity will be “meaningfully higher” than the 5-year average.
- JPMorgan’s View: Troy Rohrbaugh (Co-CEO, Commercial & Investment Bank) echoed the sentiment, calling the 2025-2026 pipeline “excellent” and potentially a “top decile” year for M&A, driven by robust IPOs rather than SPACs.
🏆 THE SCORECARD (2025): Goldman is speaking from a position of strength, having retained the #1 spot for global M&A in 2025 ($1.48 trillion in volume).
- Key Deals: The bank advised on the massive $55 billion LBO of Electronic Arts (EA) and Alphabet’s $32 billion acquisition of Wiz.
💡 ANALYST TAKEAWAY: The M&A market is shifting from “Discretionary” to “Necessary.” For the last two years, PE firms held onto assets hoping for rate cuts and multiple expansion. Now, the fundraising cycle is forcing their hand. Expect a flood of secondary buyouts, IPOs, and corporate carve-outs in 2026 as sponsors prioritize liquidity over peak valuation.
👇 Dealmakers: Are you seeing sponsors finally lowering price expectations to get deals across the line?