December 31, 2025 – After a prolonged period of hesitation defined by relatively high interest rates and a gruelling regulatory environment, the merger market reawakened decisively in 2025. Transaction volume accelerated, deal size expanded, and large strategic combinations moved from fantasy to reality.
The shift mirrored a broader theme that played out in the capital markets this year, including a return to transformative action after extended caution. Just as capital markets reopened, corporate boards and executives moved past “wait and see” and into “act and execute.” Moreover, transactions that previously appeared a bridge too far under the previous anti-merger antitrust authority became suddenly potentially doable. For dealmakers feeling a renewed sense of vigour and optimism, it was “morning again in America”.
For both dealmakers and merger arbitrageurs alike, 2025 was one for the record books.
Announced mergers and acquisitions of U.S. public companies reached $1.1 trillion in 2025, up 63% compared to last year.
It was not just the megadeals driving the M&A surge – the number of deals rose 27% year-over-year, exceeding the record level previously set in 2021.
Source: Accelerate
Given the friendlier regulatory environment in the U.S., deal terminations declined by -62% year-over-year. A lower frequency of deal terminations leads to less downside for merger arbitrage investors.
Source: Accelerate
The Special Purpose Acquisition Company (SPAC) market returned with a vengeance in 2025 with its third-largest IPO tally on record.
In 2025, 144 SPACs went public, raising a total of $26.7 billion, up nearly 200% over 2024’s tally. Of the cohort that made their public market debut over the past year, 29 have already announced a business combination.
Source: Accelerate
Record transaction volumes and a more constructive regulatory environment ensured that 2025 will be remembered as the year that M&A roared back. With continued supportive capital markets, rising corporate confidence, and a friendlier regulatory environment, transaction appetite has risen while execution risk has declined. Consequently, the conditions supporting elevated transaction activity appear likely to persist into 2026.
Happy New Year!
The AlphaRank.com Merger Monitor below represents Accelerate’s proprietary analytics database on all announced liquid U.S. mergers. The AlphaRank Merger Arbitrage Effective Yield represents the average annualized returns of all outstanding merger arbitrage spreads and is typically viewed as an alternative to fixed income yield.
Each individual merger is assigned a risk rating:
- AA – a merger arbitrage rated ‘AA’ has the highest rating assigned by AlphaRank. The merger has the highest probability of closing.
- A – a merger arbitrage rated ‘A’ differs from the highest-rated mergers only by a small degree. The merger has a very high probability of closing.
- BBB – a merger arbitrage rated ‘BBB’ is of investment grade and has a high probability of closing.
- BB – a merger arbitrage rated ‘BB’ is somewhat speculative in nature and has a greater than 90% probability of closing.
- B – a merger arbitrage rated ‘B’ is speculative in nature and has a greater than 85% probability of closing.
- CCC – a merger arbitrage rated ‘CCC’ is very speculative in nature. The merger is subject to certain conditions that may not be satisfied.
- NR – a merger-rated NR is trading either at a premium to the implied consideration or a discount to the unaffected price.
The AlphaRank merger analytics database is utilized in running the Accelerate Arbitrage Fund (TSX: ARB), which may have positions in some of the securities mentioned.
* AlphaRank is exclusively produced by Accelerate Financial Technologies Inc. (“Accelerate”). Visit Alpharank.com for more information. Disclaimer: This research does not constitute investment, legal or tax advice. Data provided in this research should not be viewed as a recommendation or solicitation of an offer to buy or sell any securities or investment strategies. The information in this research is based on current market conditions and may fluctuate and change in the future. Accelerate does not accept any liability for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on all or any part of this research and any liability is expressly disclaimed. Accelerate may have positions in securities mentioned. Past performance is not indicative of future results.
