Top Jefferies Banker Weighs AI Rewards Against Recession Risk

Hi, it’s Ryan Gould in New York, speaking with one of the top investment bankers at Jefferies about some of the big M&A themes heading into the final stretch of 2026. Also today, we round up deal numbers from the third quarter, and there’s news of a much-needed IPO win for London.

Today’s top stories

Airtel Money plans UK IPO that may rank as biggest in five years.Major Berentzen holder says Sazerac takeover bid is too low.Sycamore nears deal to sell Boots to Canada’s Westons.Spam maker Hormel expands in chicken with $1 billion deal.Weil to lose key UK private equity partners as exits mount.

Risk, reward

Dealmakers remain on course for another banner year of M&A — though there are some small signs that not everything will go their way in the final three months of the year (see our Data drop section below). As the third quarter drew to its close, I caught up with Jason Greenberg, global head of investment banking strategy at Jefferies, to get his thoughts on the M&A market and some of the potential threats to activity. Here are some edited highlights from our chat. —Ryan Gould

Should we be concerned about the drop in deal values in Q3?I think 2026 was a year of depth, not breadth, in M&A, so I think looking at 2026 by deal volume probably mis-estimates what’s happening. I think M&A is actually doing well. The trends are positive, meaning I don’t see a slowdown.

How do you see things developing next year?If I look forward to ’27, I think about it in a couple ways. One is, you have to take it from a macro standpoint. I think north of half of GDP growth this year in the US is coming from investment in AI, CapEx investment. If you roll forward projections another two to three years, you’re going to have 100% of growth in nominal GDP coming from the expected AI spend.

What will that mean for M&A?The number one question — and this goes to a macroeconomic question for the US economy — is: are you going to see the ROI and the revenue come from all of these investments? And two is: are we able to make them? Are there enough picks, shovels, electricians, carpenters, land approvals, use approvals to actually get this stuff built? If so, that keeps growth strong, that keeps acquisition currencies in the market strong, and I think you’ll continue to see a substantial amount of M&A happen.

And what about all the potential AI risks being talked about?The big question is how long does the optimism last? As soon as people get concerned that the return on investment is not generating at the levels being talked of, it could send us into an economic tailspin. It feels a bit like 2000-2001: if the rate of investment change stops, the music stops, and that will have a huge impact on stock valuations. On the upside, it could be enormous — we’re talking 5%-6% GDP growth — but it could also cause a huge recession. We’re looking at a larger gap in potential outcomes than I’ve seen in 20 years.

The US midterms are coming up. Will the outcome impact M&A? Will the midterms change Congress? Probably. But will they change the agencies that set regulatory policy? No. So they stay with the current administration. That would have been the number-one concern, because I think there’s a perception today that there’s a huge number of deals that are possible under a Trump administration that probably wouldn’t be under a Democratic administration. So I don’t think that changes. Monetary policy again won’t change. And foreign policy I think is most apt to change with Congress, but I don’t know how much foreign policy is pushing any M&A deal that I’m focused on in tech.

You’re also executive chair of Jefferies’ TMT team and I’m curious to know what you think about private equity’s software exposure in light of the sell-off earlier this year?You’re hitting the point now with the 2018 to ’21, or 2018 to ’22, class of investments that I think you don’t have enough time. You have a maturity wall coming in 2028 and 2029 for a lot of software companies. You’re seeing the early resets of those, some of which are through liability-management exercises, some of which are through handing over the keys, some of them are sponsors putting new equity in. I think that’s going to open up the market, and people are just going to have to transact at lower values.

Data drop

Dealmakers have ground to make up as they chase a record year of M&A, after a slower third quarter brought fresh challenges that cost Wall Street some momentum. The value of announced deals in 3Q dipped roughly 10% year-on-year, Bloomberg-compiled data show.

But with $3.8 trillion of deals over the year to date, companies and their advisers could yet top the $5 trillion-plus M&A record of 2021. To do that they’ll need to navigate the prospect of a rate-hiking cycle, rising levels of AI anxiety, and US midterm elections that could impact timetables for larger deals.

“There’ve been a lot of shocks to the system: a war in the Middle East, a conflict in Russia, Ukraine, interest rates and all the talk of them going down but not going down,” said Jenny Hochenberg, global co-head of M&A at Freshfields. “It almost feels like the market has become immune to these shocks.”

M&A focus

Berentzen-Gruppe is facing an investor revolt over plans to sell itself to Southern Comfort-maker Sazerac. Swiss pension fund Aevum, the third-largest shareholder in the German schnapps distiller, won’t accept Sazerac’s offer price of €5.55 per share as it says it undervalues the company.

Private equity firm Sycamore Partners is nearing a deal to sell UK health and beauty retail business Boots to the Canadian branch of the billionaire Weston family. An agreement could be reached in the next few weeks.

A California federal judge cleared the way for Paramount Skydance to acquire Warner Bros. Discovery, signing off on its settlement with 12 state attorneys general who sued to block the $110 billion merger. Banks also wrapped up the syndication of roughly $52 billion of debt to fund the transaction.

Spam maker Hormel Foods is expanding its chicken business with a $1 billion acquisition of Brakebush Brothers. The acquisition is expected to strengthen Hormel’s food-service business at a time when restaurants have heavily promoted chicken to offset the impacts of higher beef prices.

Transurban Group agreed to buy A$4.5 billion ($3.1 billion) of Australian toll road assets from Canada Pension Plan Investment Board, increasing its stakes in three of Sydney’s busiest toll roads.

Meanwhile, Australia’s Lynas Rare Earths, the largest rare earths producer outside of China, will acquire Meteoric Resources in an all-share deal worth about A$968 million ($672 million), giving it access to a new deposit of the critical minerals in Brazil.

IPO watch

Airtel Mobile Commerce is looking to raise £529 million for its shareholders in what could be London’s biggest IPO in five years. The mobile payments company, known as Airtel Money, is set to have a market value of £5.3 billion.

India’s IPOs are powering ahead like never before, defying a selloff in the stock market. September delivered a string of records, from the number of deal launches to draft prospectus filings.

Infinigence AI, a Chinese AI cloud infrastructure provider, is preparing for a Hong Kong listing as early as the first half of next year to capitalize on demand for computing resources to power AI models and agents.

Private markets pulse

As he looks to become the next Warren Buffett, Bill Ackman is taking a page from the likes of Brookfield and Blackstone. In his quest to turn Howard Hughes Holdings into a modern version of Berkshire Hathaway, he’s looking to raise third-party capital to boost returns at the real estate developer.

TPG has raised $10 billion for a second private equity fund dedicated to climate strategies. TPG Rise Climate II invests in companies in sectors spanning clean energy, electric transportation and sustainable materials.

The private credit arm of buyout firm BC Partners is looking to raise about $2 billion for its fourth special opportunities fund. It would be BC Partners’ largest special opportunities fund to date.

Investcorp secured $1.22 billion from institutional investors for its latest North American private equity fund, a shade above its target in a difficult environment for alternative asset managers seeking fresh capital.

Private credit firms rushing to finance the AI buildout risk are encountering the same concentration problems that have plagued lenders exposed to software companies, according to Carlyle.

Activist corner

Elliott Investment Management said an international tribunal reinstated an award against South Korea over the 2015 merger of two Samsung Group companies, granting the activist about $113 million including additional costs.

Who’s news

ReliaQuest, a KKR and EQT- backed cybersecurity company valued at more than $3 billion last year, has hired Krish Venkataraman as CFO. Venkataraman has public company experience as the former CFO of KnowBe4 and has also worked at American Express and cybersecurity startup Socure. ReliaQuest founder Brian Murphy told Liana Baker in an interview that the company is on track to make $400 million in annual recurring revenue and is profitable and growing more than 25% year-over-year. It’s focused on adopting agentic capabilities. “AI is a tailwind for cybersecurity and the attackers are using it today and we have no choice but to use it,” Murphy said.

And lastly, Weil Gotshal & Manges is set to lose a number of top UK lawyers focusing on private equity in London, marking the latest in a string of departures that’s rattling the law firm.

Best of the rest

Blackstone bets $1 billion on firm aimed at boosting US defense.ConocoPhillips mulls sale of Norway assets after receiving offer.Air France-KLM, Lufthansa submit improved offers for TAP.Eurazeo joins global investment firms expanding in Abu Dhabi.Partners Group considers sale of modular builder Parmaco.UBS should quit Switzerland over capital rule, investor says.Ares, Apollo lead $6.5 billion debt deal for Phoenix Tower.Kalshi finalizing new funding at $40 billion value ahead of IPO.Trump unveils $200 billion in South Korean energy investments.AI infrastructure firm Accelevation edges down after IPO.

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