The mood in dealmaking has turned noticeably more confident. Goldman Sachs chief executive David Solomon said on Friday that the bank expects mergers and acquisitions activity to accelerate in 2026, helped by easing monetary conditions, fiscal stimulus in developed markets, capital spending on artificial intelligence, and a more balanced US regulatory environment. Global deal volumes are running comfortably ahead of the same point last year, even with war risk and market volatility hanging over sentiment.
On the surface, that optimism seems hard to reconcile with the anxiety now running through private credit. Yet the contradiction is more revealing than puzzling. Blackstone’s flagship private credit fund, BCRED, has posted its first monthly loss in more than three years, falling 0.4% in February. Withdrawal requests in the first quarter reached $3.7 billion as investors tried to reduce exposure amid concerns over liquidity and deteriorating credit quality.
The pressure has been especially acute in software-linked lending, where questions about valuation and long-term resilience are colliding with the disruption promised by AI.
A second warning has come from Britain. The Financial Conduct Authority has opened an enforcement investigation into Market Financial Solutions, the London lender that collapsed in February. The failure has left creditors facing more than £1.3 billion in losses, with exposures spread across major banks and private-credit players. It has also raised more uncomfortable questions about diligence, collateral, and what lenders really understood about the risks embedded in the structure.
Put together, those developments describe two markets moving at different speeds. In public, boards and advisers are becoming more willing to pursue strategy again. In the credit plumbing underneath, there is a renewed argument over underwriting discipline, lender concentration, liquidity, and how robust private market valuations really are. That gap matters because appetite alone does not feed deal cycles. They depend on confidence that the financing chain will behave as expected when stress appears.
Private credit has spent years benefiting from a powerful narrative: banks retreat, private lenders step in, execution becomes faster, and companies gain flexible access to capital. Much of that story remains intact. But cycles have a habit of exposing where convenience masked fragility. The recent turbulence is a reminder that the credit cycle has not disappeared simply because capital moved into private channels. It has merely become harder to observe in real time.
That does not mean the M&A rebound is illusory. Large corporates can still pursue disposals, consolidating deals, and acquisitions where strategic urgency is clear and antitrust pressure has eased. Activists continue to press boards to simplify portfolios, and hostile activity may yet increase if volatility makes friendly transactions harder to price. But stronger headline deal appetite does not remove the need to scrutinise the financing beneath it.
That is where the present moment becomes interesting. Strategic logic may be improving at the same time as confidence in the financing ecosystem fragments. The strongest acquirers will not be the ones that mistake public optimism for private robustness. They will be the ones that ask harder questions about financing certainty, lender exposure, covenant quality, collateral assumptions, and counterparty resilience before the first announcement is drafted.
A board can be ready to do a deal before the market is fully ready to carry it. In a cycle like this, discipline is not the enemy of ambition. It is what allows ambition to survive contact with the terms sheet.
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