How M&A deals create new opportunities in secondary markets

Consolidations such as these can create demand in public secondaries. That’s because companies often sell off non-core assets in the event of a merger, opening doors for smaller firms in the secondary market. Mergers can also lead to new collaborations that impact investment opportunities in the secondary market. 

Acquisitions can affect company valuations, which is particularly pertinent in the stock market, where sudden, unexpected gains may materialize after a deal is publicized. Shareholders can benefit further if a bidding war develops or management holds out for a higher offer — although it’s important to note these potential gains always come with correlating risks.

Private secondaries — a sector where “the potential for continued growth is significant,” according to BlackRock — may also be impacted by mergers and acquisitions that involve privately held companies.

The acquisition of a private company by another firm is a liquidity event for its shareholders. Upon its purchase, those shareholders may be able to cash in their stock based on the company’s valuation in the deal. 

This has historically been a crucial opportunity for early employees, venture capitalists, and private equity firms to realize their gains from private market investments. But the opportunity is increasingly accessible to a wider pool of investors.

Platforms like Augment*, which helps enable investors and institutions to purchase and sell stakes in private companies, are factors in the surge of activity in this sector. Secondaries may even be becoming a key driver of acquisitions in the private space. 

In 2024, the secondary market for private equity funds saw record transaction volumes as investors sought solutions for liquidity generation amid a downturn in dealmaking. (Morgan Stanley, 2025)  Interest in the pre-IPO stock space has grown alongside increased levels of private secondary market activity.

2025 Outlook

According to Morgan Stanley's 2025 outlook, deal volume is expected to tick up in 2025 as investors bet on a favorable regulatory environment and almost $3 trillion in uncommitted capital. (Morgan Stanley, 2025)

Less active areas of the M&A market — such as private equity monetizations, strategic deals, and cross-border transactions — are now poised for growth, according to Morgan Stanley’s 2025 M&A Outlook. Some of this positive forecasting has to do with an anticipated shift toward a more accommodative regulatory environment. 

Cross-border M&A deals could also increase in 2025, particularly among European and U.S. companies. This comes as the U.S. economy continues to significantly outpace that of Europe and the U.K., which could lead many of those firms to seek out exposure in the U.S. Meanwhile, stateside companies could look to take advantage of lower valuations across the Atlantic Ocean. (Morgan Stanley, 2025)

M&A is starting to create opportunity in secondary markets again, but not in a broad or uniform way. The biggest shift is that deal value can rise even while overall deal activity remains selective, which means opportunity is often concentrated in the companies, subsectors, and ownership structures most likely to attract acquirers. For investors in secondary markets, that matters because liquidity and repricing tend to show up first where dealmakers see the clearest path to value creation.

This is especially relevant heading into 2026. As financing conditions improve and strategic buyers become more active, secondary market participants may see more price movement in companies that sit close to potential transactions. That can include firms viewed as likely acquisition targets, businesses in attractive subsectors, and private companies whose shareholders want liquidity before a formal exit.

Why dealmakers are getting more active

Several forces could accelerate dealmaking activity over the next 12 months. Monetary policy may ease, financing may become more available, and capital markets have become more supportive than they were when volatility and uncertainty kept many buyers on the sidelines. At the same time, both private equity and corporate dealmakers are under pressure to deploy capital, reshape portfolio priorities, and pursue long-term growth.

For secondary investors, the key insight is that this does not just increase the number of deals. It can also increase the number of situations where private shares become more attractive before a transaction is completed. When acquirers begin to focus on a company or subsector, demand in secondary markets can rise as investors try to gain exposure ahead of a possible sale, strategic investment, or broader liquidity event.

Why the recovery still feels uneven

Even as aggregate deal value may rise sharply, activity remains unevenly distributed across the overall market. Larger deals and the resurgence of megadeals can lift headline numbers, even as broader deal activity remains subdued in areas facing headwinds from financing costs, volatility, tariff exposure, or macroeconomic and geopolitical uncertainty.

That uneven recovery can still create secondary market opportunities. In fact, it can make them easier to spot. When activity in 2026 intensifies in only certain subsectors, secondary investors may focus on where dealmakers are returning first rather than trying to follow the whole market.

A stronger IPO market could create new opportunities in secondary markets even before more companies go public. When the IPO landscape improves, it gives boards, founders, and early investors another path to liquidity. That tends to improve valuation discovery, which can make private shares easier to price and more appealing to investors looking to transact before an exit.

This can also support M&A. If buyers and sellers have better benchmarks from capital markets, they can negotiate with more confidence. For secondary investors, that means the reopening of the IPO market may not only create direct pre-IPO opportunities, but also may raise the odds that strategic buyers move sooner to acquire private companies.

Why a stronger IPO window matters for secondaries

For secondary markets, a better IPO backdrop can buoy demand in private shares. Companies that may have delayed exit plans in late 2025 could return to the market, while employees and early backers may become more willing to sell a portion of their holdings. That creates more chances for investors to transact with better pricing context.

It also means that activity in 2025 and activity in 2026 may not be driven by acquisitions alone. In some cases, a healthier IPO market may make private secondary transactions more active by drawing more attention to well known companies operating outside the public markets..

Why IPOs and M&A often move together

A stronger IPO market does not necessarily pull companies away from dealmaking. In many cases, it does the opposite. Once comparable valuations become clearer, acquirers may act faster to secure attractive targets before a company’s price expectations move higher. That can shorten deal timelines and bring more urgency to negotiations.

For investors in private secondary markets, that may create a useful dynamic. A company does not need to complete an IPO to become more interesting as a secondary opportunity. Sometimes the market may need valuation clarity for demand to rise, for shareholder liquidity to increase, or for strategic buyers to re-engage.

Private secondary market opportunities are sometimes strongest at the sector level. Even when overall deal activity remains selective, some subsectors can attract more attention from dealmakers than others. When that happens, investors may see higher demand for private shares, faster valuation resets, and more frequent liquidity discussions around companies operating in those areas.

One of the current sources of secondary market opportunity is AI infrastructure. As companies race to build and support AI capabilities, buyers are looking beyond applications and focusing on the underlying systems that make AI usable at scale. That includes aligned data centers, cloud tooling, cybersecurity, networking, compute, and other critical inputs.

As demand builds across the stack, investors may see more interest in private shares tied to businesses with scarce technical assets, strong customer traction, or infrastructure that helps enterprises deploy AI more effectively.

Why dealmakers care about AI infrastructure

Many dealmakers may see AI as fundamentally reshaping how companies compete. That could push acquirers to move faster in subsectors tied to performance, resilience, and secure deployment. In practical terms, that means AI infrastructure is becoming a meaningful source of deal activity, not just a technology theme.

It also creates opportunities in secondaries because buyers often need exposure before a company may trade in the public markets.When that demand spreads across related subsectors, private shares in comparable businesses can become more attractive.

What this means for private secondary market investors

One insight is that the AI opportunity in secondaries may be broader-based than many investors expect. It is not limited to companies building headline models. It extends to the infrastructure and services layer that allows enterprises to deploy, secure, monitor, and scale those systems.

That means private secondary market investors may find opportunity in companies that support AI infrastructure even if those businesses are not part of a public narrative. As dealmakers try to keep pace with rapid change, they may increasingly look for acquisitions that offer a strategic fit and a long-term advantage. That can make private shares in these subsectors more active and more attractive before formal exit events may occur.

Heading into 2026, one important question for secondary investors is not whether global M&A will recover in a broad-based way. It is where dealmakers are becoming active first, and which companies may benefit before transactions are finalized. In that environment, secondary opportunities may be likely to cluster where financing is improving, strategic rationale is clear, and acquirers are under pressure to move.

That points investors toward companies in subsectors that are doing well, businesses with strategic relevance, and private shares that may benefit from better valuation discovery as capital markets recover.

Closing Considerations

M&A activity, such as large-scale consolidations, can create favorable conditions for businesses in secondary markets. Understanding how this trickles down to the investor level can be the key to adding diversity and liquidity as managers look to take advantage of these occurrences. 

When considering private companies, one way to stay abreast of current happenings is to keep an eye on price changes. Augment is trying to make that easier.