Our Capital Confidence Barometer predicts healthy growth for M&A globally, which should take the market back to levels last seen before the financial crisis. With the climate still right for those large acquisitions, we can expect to see more transformational and innovative transactions. However, the growth engine of M&A for the next 12 months should be the middle market (defined as deals valued at less than US$1b). Our analysis of year-on-year changes in deal volumes shows that previous upturns have been led by mega- and upper-middle-market deals, followed by an upswing in the lower middle market. Large transactions create M&A activity further down the deal chain.