The 2025-2026 lateral market is active, but the rules have changed. Here’s what candidates should understand.
If you’ve been following the investment banking lateral market lately, you’ve probably noticed something interesting: deal activity is strong, banks are hiring, recruiters are busy—and yet, if you’re at a middle-market or regional firm hoping to move to an elite platform, the process feels harder than expected.
This cycle is different from 2021. Understanding why requires looking beyond surface-level hiring activity to the forces reshaping both the M&A market and how top banks approach talent acquisition.
The Market Is Active—But the Nature of Activity Has Changed
Let’s start with the numbers. U.S. M&A deal value is on pace to reach approximately $2.3 trillion in 2025, up 49% from 2024. Global deal values have increased, private equity exits have reached three-year highs, and CEO confidence in dealmaking has strengthened considerably.
Banks need talent. Recruiters have full pipelines. But the composition of deal activity has shifted in ways that matter for hiring.
The Concentration of Large Deals
Unlike the broad-based deal surge of 2021-2022, today’s M&A activity is more concentrated at the higher end. More than 20% of the 74 deals valued at $5 billion or more in 2025 have an AI theme. The share of deals larger than $1 billion has grown from a 2016-2019 average of 22% to 27% in 2025. Meanwhile, total deal count has remained relatively flat—meaning fewer deals overall, but larger average transaction sizes.
This has real implications for hiring preferences.
When the market featured high volumes of middle-market transactions—$200 million private equity add-ons, $500 million sponsor exits, $800 million take-privates—banks needed staffing capacity. An experienced associate from a solid middle-market firm could potentially step into that workflow.
Today’s market features more transformational transactions: Alphabet’s $32 billion acquisition of Wiz, Palo Alto Networks’ $25 billion purchase of CyberArk, Union Pacific and Norfolk Southern’s $88 billion merger, and substantial AI infrastructure investments. These transactions require bankers who have already operated at that scale and complexity.
The AI Transformation Factor
A defining feature of this M&A cycle is the strategic focus on artificial intelligence.
AI has commanded more than 50% of global venture capital funding in 2025. Big Tech firms have committed combined capital expenditures of $320 billion on AI infrastructure. Companies aren’t just doing deals—they’re making significant bets on their competitive positioning.
For investment banks, this means clients undertaking major acquisitions expect advisory teams with relevant experience. A Fortune 100 CEO considering a multi-billion dollar AI-related acquisition wants advisors who’ve navigated similar complexity before.
Lessons from 2021: Why Banks Have Adjusted Their Approach
To understand the current hiring environment, it helps to understand what happened during the last boom—and how institutions have adapted.
The 2021 Hiring Environment
When M&A activity surged in 2021, banks faced capacity constraints. With over $5 trillion in global transactions—the highest ever recorded—deal teams were stretched. Hiring timelines compressed, and standards adjusted accordingly.
Signing bonuses increased substantially. Banks extended offers to candidates they might have passed on in normal markets. Notably, uptiering candidates—bankers from middle-market and regional firms—received more opportunities at elite platforms than in typical cycles.
The Adjustment Period
Over time, some of these hiring decisions proved challenging. The issue wasn’t effort or intelligence—it was that certain skill gaps were harder to bridge than anticipated.
A banker who had spent years executing $300-500 million private transactions hadn’t necessarily developed experience with:
- SEC disclosure requirements and public filing processes
- Board dynamics and fiduciary considerations in public company contexts
- Competitive auction processes with multiple sophisticated bidders
- Regulatory complexity involving HSR, CFIUS, or international reviews
These capabilities develop through repetition on larger, more complex transactions. They’re difficult to acquire quickly through on-the-job learning at a new platform.
When market conditions normalized in 2022 and 2023, some lateral hires struggled to meet expectations. Banks took note, and hiring approaches have since become more selective.
Current Hiring Standards: More Emphasis on Relevant Experience
The 2025-2026 recruiting market places greater weight on specific, demonstrable experience. Banks are looking more carefully at the details behind resume bullet points.
Deal Quality Over Deal Count
The consistent message from recruiters working with elite platforms: hiring managers are examining deal quality more closely. Public-to-public sell-side transactions—which involve navigating disclosure requirements, managing board processes, and executing under market scrutiny—carry particular weight.
A banker with experience on several smaller private transactions may be evaluated differently than one who played a meaningful role in a large public company sale, even if the latter represents fewer total deals.
Contribution Level Matters More
Banks have also become more focused on understanding what role candidates actually played in their transactions.
Hiring managers increasingly ask specific questions:
- Did you lead the buyer outreach process, or primarily support documentation?
- Were you responsible for valuation work and defending it to stakeholders?
- Did you interact directly with senior executives and board members?
- Can you discuss strategic rationale and deal dynamics in depth?
The standard has shifted toward understanding whether candidates were meaningfully involved in key aspects of transactions, not just whether they were on the deal team.
More Rigorous Interview Processes
Interview processes have become more detailed. Candidates should expect in-depth discussions about specific transactions:
- “Walk me through the M&A process from initial outreach to closing. What was your role at each stage?”
- “How was the company positioned to buyers? What was the strategic rationale?”
- “What valuation approach did you use? How did the board respond?”
- “Describe a situation where the deal faced challenges. How were they addressed?”
For candidates from smaller platforms, interviewers may probe for experience gaps:
- “Tell me about the most complex regulatory process you’ve navigated.”
- “Walk me through how you’ve managed competitive situations with multiple bidders.”
- “Describe your experience working with boards of directors.”
These questions assess whether candidates have the specific experiences that larger transactions require.
Why Uptiering Has Become More Difficult
Despite healthy deal activity, moving from a middle-market platform to an elite boutique or bulge bracket has become more challenging. Several factors contribute to this shift.
The Fall 2024 Experience
As deal activity picked up in late 2024, many expected uptiering opportunities would follow. Bankers at middle-market and regional firms explored opportunities, took recruiter calls, and went through interviews.
The results were disappointing for most. Banks engaged recruiters and reviewed candidates, but extended relatively few offers to uptiering candidates. The elevated standards meant that capable bankers from good platforms still faced significant headwinds.
Structural Factors
Several structural factors make uptiering difficult regardless of market conditions:
Experience differences: The gap between middle-market private transactions and large-cap public M&A involves meaningfully different skill sets. It’s not simply a matter of scale—the regulatory environment, stakeholder dynamics, and execution requirements differ substantially.
Client expectations: Clients of elite platforms expect advisors who’ve operated at similar levels before. They’re generally not looking to subsidize learning curves on significant transactions.
Competitive dynamics: When banks can recruit proven performers from peer institutions, there’s less incentive to take chances on candidates from different platform tiers.
Institutional memory: The experiences of 2021-2022 remain fresh. Hiring managers are more cautious about capability gaps that may be difficult to close.
One perspective from an elite boutique: lateral hiring is focused on bankers who can contribute immediately on complex transactions, not on developing talent who need substantial ramp-up time.
How Banks Are Approaching Recruiting
Banks have become more targeted in their recruiting approach, focusing on specific profiles rather than broad candidate pools.
Targeted Searches
Recruiter mandates have become more specific. Rather than “see who’s available,” instructions often specify:
- Candidates from particular firms or peer institutions
- Experience on specific types of transactions
- Particular industry focus areas
The result is a more concentrated competition for a narrower pool of candidates who meet specific criteria.
Experienced Candidates Becoming More Available
An interesting development: some bankers who previously weren’t considering moves are now open to conversations.
The wave of managing director lateral moves across elite platforms over the past 18 months has created organizational change at many firms. When senior bankers move, it can affect the teams they leave behind:
- Mentorship relationships and career sponsorship may shift
- New leadership often brings different working styles and expectations
- Team dynamics and advancement paths can become less clear
For mid-level bankers who built their careers around specific senior relationships, this instability has prompted some to consider options they wouldn’t have explored before. This has expanded the pool of experienced, elite-platform talent available for lateral moves.
For banks, this is positive—more proven candidates to recruit. For uptiering candidates, it means even more competition from candidates with directly relevant experience.
Earlier Recruiting Timelines
Banks are also recruiting earlier in the cycle. Rather than waiting until post-bonus season in February or March, many are extending offers in November and December with later start dates.
The logic: identify and secure preferred candidates before the typical hiring season creates intense competition for the same small group of qualified people.
This preemptive approach means candidates who wait to explore options may find fewer opportunities available by the traditional recruiting season.
How Candidates Are Evaluated
Banks generally evaluate lateral candidates through a tiered framework based on experience and platform:
Most Competitive:
- Public company M&A experience, particularly sell-side
- Meaningful involvement with direct client exposure
- Elite boutique or bulge bracket background
- Stable tenure (3-5+ years at current firm)
- Track record across multiple complex transactions
Competitive with Some Questions:
- Large private M&A or public-to-private experience
- Supporting roles with clear contributions
- Strong but not top-tier platforms
- Logical career progression
More Challenging:
- Primarily middle-market private transactions
- Limited direct deal involvement
- Platforms perceived as lower tier
- Recent layoff situations
- Frequent job changes
Significant Headwinds:
- No public M&A experience
- Attempting to pivot from coverage or capital markets to M&A
- Multiple unsuccessful uptiering attempts
- Performance or cultural concerns
The Regulatory Environment
The current administration has signaled a more accommodative approach to merger review compared to the prior administration. The FTC and DOJ have shown renewed willingness to accept structural remedies and have worked to accelerate review processes for straightforward transactions.
Interestingly, a more favorable regulatory environment doesn’t necessarily help uptiering candidates. When deals face less friction and more transactions proceed, banks need to staff more live deals simultaneously. This increases the premium on bankers who can contribute immediately without extended ramp-up periods.
A busier deal environment reinforces the preference for candidates with directly applicable experience.
Practical Considerations for Different Candidates
For Bankers at Elite Platforms with Public M&A Experience
This is a favorable market for your profile. Multiple institutions are likely interested in candidates with your background, and compensation packages reflect that demand.
If you’re considering a move, engaging sooner rather than later may be advantageous given the preemptive recruiting timelines many banks are following.
For Bankers at Middle-Market or Regional Firms
The honest assessment: this particular cycle presents meaningful challenges for uptiering. That doesn’t reflect on your abilities—it reflects structural market dynamics that have made platform transitions more difficult.
Some realistic considerations:
Build within your current tier: Many middle-market platforms offer strong career trajectories. The work is substantive, compensation is competitive, and work-life balance is often better than at larger institutions.
Consider adjacent opportunities: Your skills translate to corporate development, private equity (at appropriate fund sizes), or other roles where platform pedigree matters less than capability.
Traditional pathways remain available: If moving to an elite platform is important to your long-term goals, MBA programs with strong banking placement remain a viable route, though it requires a significant investment of time and resources.
Market conditions evolve: Hiring standards fluctuate with market conditions. The current environment is particularly challenging, but that doesn’t mean it will remain so indefinitely.
For Candidates Affected by Recent Layoffs
This market also presents challenges for bankers who were part of recent reductions in force. Some institutions screen for this, viewing it—fairly or not—as a potential signal.
The best approach is to be straightforward about circumstances while demonstrating continued engagement through networking, skill development, or project work.
The Broader Pattern
What we’re seeing reflects a broader stratification in investment banking, with mobility between tiers becoming more limited:
Elite tier: Bulge brackets and elite boutiques recruit primarily from each other. Lateral movement within this tier is common and well-compensated.
Middle-market tier: Strong platforms with good training and deal flow, but limited pathways to the elite tier through lateral moves.
For people early in their careers, this pattern has implications: initial platform placement has become more consequential for long-term trajectory. Starting at a top-tier institution provides optionality that can be difficult to acquire later.
Looking Ahead
The factors shaping this market—large deal concentration, emphasis on relevant experience, expanded pool of elite-platform candidates, earlier recruiting timelines—appear likely to persist in the near term.
Banks have found that more selective hiring approaches produce better outcomes than the volume-driven approach of 2021. As long as they can find candidates who meet their specific criteria, there’s limited incentive to adjust those standards.
For candidates inside the elite tier, this remains an attractive lateral market. For candidates outside it, the barriers are higher than in recent memory.
Markets reward what they value at any given moment. Currently, the emphasis is on demonstrated experience at relevant scale and complexity. Whether those standards are optimal is a separate discussion—but understanding them is essential for anyone navigating this environment.