Jones Day: AI accelerates record M&A boom, but company valuations have reached dangerous levels

The M&A market on July 7, 2026, according to Bloomberg data, is reaching record volumes — and AI technologies are the primary driving force. Robert Profusek, partner at Jones Day and one of the leading corporate lawyers in the USA, describes the situation with unexpected caution: valuations of AI companies have risen to unprecedented levels, private capital remains on the sidelines for now, and the question of long-term boom sustainability remains open.

What's Driving the Record Deal Market

According to Profusek's assessment, three forces have converged simultaneously to create the current wave of M&A activity.

AI as a Strategic Imperative. Corporations from the technology, financial, medical, and industrial sectors are acquiring AI assets, fearing technological lag behind competitors. When a deal is driven by strategic necessity rather than just expected returns, the buyer is systematically willing to overpay. It is precisely this pressure — "buy now or lose the market" — that drives valuations to levels detached from any fundamental metrics.

Excess Free Capital. Institutional investors have accumulated record liquid reserves and face pressure from limited partners demanding active capital deployment. Competition for quality AI assets has become so intense that a convincing growth story instantly attracts multiple competing buyers.

Relaxed Regulatory Environment. The priorities of US antitrust authorities have shifted: deals that would have been blocked in regulatory corridors just a few years ago now pass without serious resistance. This has opened the market to mergers previously considered legally unfeasible.

Profusek calls the convergence of all three factors historically rare — and that is precisely why the current boom appears so rapid.

Why Private Equity Stands Aside

Against the backdrop of record volumes, one anomaly stands out particularly: direct investment funds (private equity) remain primarily observers rather than deal participants.

Profusek's explanation is straightforward: seller expectations are too high. AI company owners are guided by the public multiples of sector leaders and set prices incompatible with the PE return model. For a fund with a 5–7 year investment horizon and strict IRR commitments to its partners, an inflated entry point makes the deal unprofitable in the base case scenario.

Profusek characterizes current AI valuations as unprecedented. The market is not paying for existing cash flow but for growth forecasts that are extremely difficult to verify in standard financial models. Any slowdown in AI revenue growth rates or deterioration of the macroeconomic environment could expose the invalidity of current multiples.

In previous M&A cycles, the large influx of PE signaled the market's transition to a mature sustainable phase with understandable pricing. Its current absence is an analytical indicator that the market is still in a mode of primary strategic frenzy, unsupported by financial discipline.

What This Means

The record M&A boom is unique: enormous in volume but one-sided in participant composition. Strategic buyers are paying any price for an AI position, while financial investors await valuation corrections. If the price gap between sellers and financial buyers does not narrow, the boom risks stopping before PE capital enters it—capital that historically lends long-term sustainability to market cycles. Jones Day is openly signaling this risk.