Record M&A and private-capital closes mask structural unease

Global M&A activity hit $2.8 trillion in 2024 according to the Financial Times, driven by megadeals as companies and investors respond to economic shifts linked to artificial intelligence. The headline number marks a sharp recovery from the drought of the prior two years, when rate hikes and valuation uncertainty froze large transactions. Private capital followed suit: Starwood Capital Group closed a $10.2 billion opportunistic real estate fund targeting industrial and residential assets, while RedBird Capital's spinout Maple Park neared its target for a debut vehicle focused on sports and media.

Yet the surge in aggregate deal value and fund closings does not tell the full story. The FT also reported on Medallia, a software company backed by private credit that has seen its equity wiped out and its debt trading at distressed levels. The case is a reminder that leverage deployed in 2021 and 2022 is still working through the system, and not every portfolio company will refinance its way to safety. Private credit's rise coincided with peak valuations and minimal covenant protection; the Medallia outcome suggests more equity zeroes are embedded in credit portfolios than the asset class's smooth return history would imply.

Meanwhile, Freddie Mac introduced interest-only multifamily loans to keep capital flowing into apartment construction and acquisition. The program is a signal that even agency lenders see stretched underwriting as preferable to a freeze in multifamily lending. Interest-only structures defer principal repayment, lowering near-term debt service but concentrating refinancing risk at maturity. Freddie's move implies that without product innovation, multifamily transaction volume would fall further.

Taken together, the coverage shows capital markets in motion but not in equilibrium. Record M&A reflects pent-up demand and CEO confidence that the next cycle is here. Starwood and Maple Park are raising capital because LPs believe dislocations create opportunity. But Medallia and Freddie's new loan product reveal stress in the layers below: overleveraged privates, multifamily maturity walls, and a scramble to keep refinancing chains intact. The headline deal count is real; so is the cleanup work still underway.