00:00I do want to start with deal making because you think about the first quarter of 2026. It was the
00:06best start to a year ever for deal making a global tally of about one point three trillion dollars. But
00:13we know that the world changed at the end of February at the start of March. So I wonder where
00:18you're sitting now. Of course in May. How do your expectations for how 2026 is going to play out. Where
00:24do they stand relative to where they were at the beginning of January. Yeah I think backlogs are still very
00:29strong.
00:29And you saw even in March a series of M&A announcements. So I think the backdrop around deal making
00:36is still pretty solid. I think in that context corporate boardrooms didn't do a lot of M&A in 22,
00:4523, 24. So there's a pent up demand around pursuing strategic action. There's a rationale to do that. AI spend
00:53the focus on scale. You've got a regulatory environment that's pretty conducive to merger.
00:59And then you've got the markets. And you guys are just talking about it. You have credit markets that are
01:04still functioning exceptionally well. Investment grade, non-investment grade and with liquidity.
01:09And then the last thing is the S&P is at a pretty good price in that context. Now all
01:14of that is balanced against geopolitics and some uncertainty around the disruptive and transformative part of AI.
01:21But the sort of backdrop over the balance of 26 and we would argue into 27 around the resurgence in
01:31M&A is still there.
01:32And it's interesting. You bring up AI. And that's the other big disruptive force that I wanted to talk about
01:37because we've had a lot of conversations here and over the past few weeks about how that's playing out in
01:42private credit.
01:44Sort of the big overarching concern that software businesses that look like sure bets in 2021, 2022 may be not
01:52so sure now.
01:53So outside of private credit, how is that impacting the IPO pipeline and the dealmaking trajectory?
01:59Yeah. And I can get back to AI finance, which has been the big activity for us in the last
02:05eight weeks or so or and throughout last year.
02:09You know, software equities are down. Some of the concerns around AI disruption is there.
02:14The IPO pipeline and software is relatively modest. I think over time you'll see consolidation and winners and losers being
02:23picked around the software industry.
02:26It's not going away. And so firms will adapt and that will create capital raising opportunities, but it will also
02:32create some level of either consolidation or changes of ownership.
02:36But, you know, it's a relatively small part of the non of the sort of wallet for dealmaking, as you
02:44said.
02:45So we haven't seen it really play through in any meaningful economic way for dealmakers.
02:51Is there a certain sector that you look at right now as maybe potentially being the primary driver of M
02:58&A activity or is it going to be a little bit more dispersed?
03:01I think it's quite broad based.
03:01I think where we look at our pipeline and where we deploy resources, I think you've got technology away from
03:09the software sector,
03:10where there's still a lot of economies of scale and people trying to buy and merge and create synergies in
03:17that business.
03:17Health care is still extremely active industrial companies trying to understand how the world supply chains work, how the energy
03:25flow of capital works.
03:28But even on consumer, we do a very large deal or announced to where McCormick and Unilever put their businesses
03:34together.
03:34And so I think it's quite broad based.
03:37And then you do have that regulatory overlay, which is pretty broad based in terms of, you know, a willingness
03:44to allow some consolidation.
03:45And I would add, you know, financial services is in that category as well.
03:50So it's quite broad based and it's broad based not just in the U.S.
03:54It's a global M&A is up as well.
03:58Are you finding that clients are doing these deals because they want to or because they have to?
04:02I would say the majority are doing them because they want to.
04:05I think the buyers are looking for ways to grow their business, to take advantage of their relative competitive advantage,
04:13you know, find opportunities for growth.
04:15And then I think private equity is a two way market.
04:17Right.
04:17They both have enormous dry powder, but they also have portfolios that are starting to age.
04:22And so you see an inducement there to act.
04:26But there's very little, I would say, distressed M&A in the marketplace this year and probably for the rest
04:32of this year.
04:33Let's go back to AI financing, something that you mentioned.
04:36Morgan Stanley is doing a lot of right now.
04:40Talk to us about the momentum, because, I mean, that's been the story for a while now when you think
04:45about the markets overall.
04:46I mean, you're still seeing that continued demand, though.
04:48Yeah, there's very strong demand.
04:50And I think this is a great U.S. story, right?
04:52So you have all this 8i deployment.
04:55The big LLMs are here.
04:57The big hyperscalers are here.
04:59The CapEx is very large.
05:00It's all being raised, in essence, in the capital markets one way or another or the cash flows from these
05:05very large companies.
05:06And we're seeing just real large diversified pools of capital be deployed.
05:11So you're seeing that in the equity raises that some of these companies are doing, both publicly and privately, strategic
05:18and financial investors.
05:19But in the credit markets, we're doing big, unsecured bond deals for the hyperscalers, like a Meadow or a Google
05:25or an Amazon.
05:26We're seeing delay-draw term loans for a company like CoreWeave, where we did it with the private credit market.
05:32But then they're out now with a chip-based, GPU-based financing that's going to the public term loan market.
05:39So real diversification in the credit markets, supplying some of that capital.
05:43And then you've got these great balance sheets, NVIDIA, Alphabet, Meta, Amazon, Microsoft as well, providing some real support to
05:52what we think is a transformative technology that needs to get financed.
05:56And I think Jensen is speaking later today, but he talks about compute equals intelligence and then intelligence equals revenue.
06:03We're seeing that in the real world around companies deploying and revenue ramps for some of these infrastructure companies.
Comments