Madison Air Seeks $2.23B in IPO, Activist Investing Picks Up In 2026 | Bloomberg Deals 4/8/2026

Summary

• Joe Baratta expresses highest conviction in the electrification of the U.S. economy, noting a historical lack of capital by big utilities for power generation and grid improvement, which created investment opportunities 5-6 years ago.
• Baratta does not subscribe to the "end of software" narrative, anticipating winners (companies with embedded systems that can leverage AI) and losers (simple point solutions that may become obsolete).
• The IPO market remains open for companies with critical infrastructure roles (e.g., Medline) or those immune to AI dislocation (e.g., Madison Air in HVAC), despite overall volatility.
• Baratta expects a resumption in deal activity once geopolitical tensions ease, but emphasizes private equity has no urgency to deploy capital due to long investment periods.
• Activist investing surged in Q1 2026 with 110 campaigns targeting U.S. companies, the busiest quarter in 15 years, with a focus on smaller-cap names.
• James Smith highlights Toto as a hidden AI beneficiary due to its semiconductor components for manufacturing, seeing "plenty of upside."
• Smith also sees potential value in select software companies with strong moats and proprietary data that can withstand AI disruption, but stresses the need for careful analysis.
• Elizabeth Gonzalez-Sussman notes volatile markets create more opportunities for activists to buy low, but geopolitical issues may impede the strategic changes needed to unlock value.
• Shaun Mathew observes that while activism remains high, campaigns pushing for M&A events face headwinds from challenged financing markets.
• Matt Zimmer reports a strong M&A pipeline in sectors like industrials and aerospace & defense, but warns sustained high energy prices could force companies to absorb costs, reigniting inflation.
• Zimmer highlights increased defense spending in both the U.S. and Europe as a key driver, with appetite strong for defense-related investments, while commercial aviation faces fuel price pressures.
• Key risk: A prolonged energy shock could lead to higher input costs, potentially causing the Fed to raise rates, which would significantly dampen M&A activity (35% reduction seen in 2022-2023).