When JPMorgan Chase & Co. took the lead last year in financing the $55 billion takeover of Electronic Arts Inc., a record-setting leveraged buyout, Wall Street saw it as a sign that a lucrative period of bankrolling super-sized private equity deals might come roaring back.
Five months on, the mood is less jubilant.
The planned acquisition of the video-game maker showed that big banks like JPMorgan could raise large sums of money to finance leveraged deals. But with financial markets rattled by a few high-profile corporate collapses and fears that artificial-intelligence will upend entire industries, bankers are now recalibrating expectations as investors retreat from risk.
“What do we think the art of the possible is in terms of a leveraged buyout right now?,” said Kevin Foley, JPMorgan’s global head of capital markets, when asked what it takes to do a deal like the one for Electronic Arts. “A transaction of that size requires a hefty equity check and a consortium of investors.”
The banker’s comments came ahead of JPMorgan’s annual leverage-finance conference in Miami, a marquee event for the industry where hundreds gather each year to drum up businesses and gauge the outlook for the year ahead.
JPMorgan Chief Executive Officer Jamie Dimon is expected to attend the event, along with Foley, Troy Rohrbaugh, co-head of the commercial and investment bank, and a slew of other executives. Representatives from corporate borrowers like American Airlines and the software makers Kaseya Inc. and ION Group are slated to attend.
The corner of Wall Street that raises money for heavily indebted companies started the year on an optimistic note. As US stock prices were hitting record highs and the Federal Reserve was edging down interest rates late last year, bankers were hoping that 2026 would shape up to be one of the strongest years since the easy money era of the pandemic led to a surge of merger-financing deals.
The outlook has since been clouded as anxious investors pull back from any industry that looks threatened by AI, which has hit software makers particularly hard. The Fed has paused its rate cuts as inflation remains stubbornly elevated. And credit markets have also remained on edge as the collapse of Tricolor Holdings, First Brands Group and Market Financial Solutions Ltd. fans fears that lax lending standards may set off a rise in defaults.
At the same time, private equity firms — which are already sitting on $3.8 trillion of unsold assets — have been constrained by pressure to return cash to investors. As a result, even as borrowing has surged elsewhere, the private equity firms haven’t been a lucrative avenue of growth: There was only about $124 billion in bank-led loans supporting LBOs in the US last year, according to data compiled by Bloomberg. That’s down from $132 billion in 2024 and half what it was when business boomed in 2021.
“Private equity has been experiencing a slower exit environment for the past few years,” Foley said. “It’s picking up, and there is certainly capacity for deals to get done. But a lot of things have to come together for the larger deals to happen.”
The shifts in financial markets haven’t derailed the business, by any means, with bankers currently working on about $100 billion of deals to finance already announced buyouts.
Foley said it remains relatively easy to raise funds in the debt markets. Direct lending firms, too, are still very much active.
Despite the concerns about software makers potentially being displaced by AI applications, direct lenders are in the process of marketing debt for the buyouts of OneStream Inc. and Clearwater Analytics Holdings Inc. JPMorgan is also leading a $5.3 billion deal to finance software maker Qualtrics International Inc.’s purchase of health-care survey firm Press Ganey Forsta.
“For the right business,” Foley said, “there is capacity to raise north of $25 billion in debt globally.”
“In the debt markets, liquidity and appetite are there but other elements need to come together.”
The Electronic Arts buyout was aided by the company’s strong underlying business and the involvement of consortium of buyers, which included the private equity firms Silver Lake Management and Jared Kushner’s Affinity Partners, as well as by the expectation the financing would tap investors across the loan and bond markets.
Private-capital firms are also playing a role in deals where banks share the debt burden. Ahead of last year’s conference, JPMorgan unveiled an additional $50 billion for direct lending and has deployed more than $18 billion.
“There are a lot more bespoke deals and we’re increasingly customizing transactions,” Foley said. “For us, private credit is about building a portfolio of relationships, not a portfolio of loans.”
With Qualtrics, for example, JPMorgan isn’t planning to rely on the leveraged loan market alone. It is exploring selling some of the debt in the high-yield bond market or to private credit firms. Despite the concerns about the software industry, Foley said it’s still unclear how AI will play out.
“AI is here to stay. It doesn’t mean that another piece of software won’t ever be created again,” he said. “It’s going to create some opportunities. But it does change the dynamics of the industry.”
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