Mergers and Acquisitions Activity Declines in Third Quarter

Despite the slowdown, 2026 is still on track to become a record year for worldwide M&A deals by dollar value. Major transactions, such as SpaceX's $55 billion acquisition of AI coding platform Cursor in June and NextEra Energy's $67 billion merger with Dominion Energy in May, indicate that large deals can take considerable time to finalize. Guthrie noted that it is common for the market to experience a slowdown as it digests these significant transactions, particularly during the third quarter when bankers often take vacations.

Recent weeks have seen mounting reasons for hesitancy in pursuing new deals. Market conditions tightened throughout September as the Federal Reserve raised interest rates by 25 basis points and Treasury yields reached multidecade highs. This rise in interest rates has increased financing costs and pressured stock values. Furthermore, concerns have emerged regarding a slowdown in the tech industry's AI developments and the ongoing effects of the US war in Iran on energy and prices.

UBS analyst Erika Najarian pointed out that an unfavorable bond market could suggest a deeper freeze in future M&A activity. Investor attention will turn to Wall Street's largest banks later this month when they report quarterly earnings, which could provide further insights into the state of dealmaking. At a Barclays conference last month, Bank of America CEO Brian Moynihan mentioned a year-over-year decrease of at least 10% in overall investment banking fees. In contrast, JPMorgan projected mid-to-high teenage growth, while Citigroup anticipated single-digit growth. Some analysts remain hopeful that a rebound in private equity exits will support continued merger activity. Oppenheimer analyst Chris Kotowski expressed confidence in an impending acceleration of M&A activity.