By Jana Mercereau, Head of M&A Consulting, Europe and David Dean, Managing Director, Mergers & Acquisitions, WTW
This strong showing puts the M&A market on track for its best year since the post-pandemic boom, setting a robust foundation for 2026. The confluence of pent-up demand, soaring stock market highs, and steady interest rates has fueled a surge in M&A activity, giving buyers every reason to anticipate a strong finish to 2025. Looking ahead, We see five key trends that companies should closely monitor as we step into 2026.
01 Finding the upside of uncertainty
The early part of 2025 was marked by significant turbulence, including aggressive tariff policies and persistent geopolitical tensions. However, the recent M&A surge suggests a crucial recalibration in the market. Buyers have demonstrated a remarkable ability to normalize and navigate through uncertainty, buoyed by lower financing costs and growing confidence in future growth prospects.
Buyers have demonstrated a remarkable ability to normalize and navigate through uncertainty. Despite this adaptability, tariff volatility, geopolitical rifts, and regulatory hurdles are not disappearing. As more companies pursue scale, early integration planning during the due diligence phase will become increasingly critical. This proactive approach will be vital for buyers aiming to lock in gains and drive long-term, sustainable growth amidst ongoing complexities.
02 The return of big deals sparks optimism
The third quarter of 2025 saw eight megadeals (valued over $10 billion) close – a level not seen since the final three months of 2018. This uptick, mirrored by a similar rise in large deals (over $1 billion), signals a growing optimism permeating the market. In 2026, we anticipate large-scale M&A will be driven by a strategic shift towards de-conglomeration. Companies will increasingly 'buy and build' in pursuit of portfolio optimization
In 2026, we anticipate large-scale M&A will be driven by a strategic shift towards de-conglomeration. Companies will increasingly 'buy and build' in pursuit of portfolio optimization, moving away from higher-risk, one-off transformative deals. This "back-to-basics" approach, focusing on core strengths and making smaller, complementary acquisitions, will gain significant traction, particularly in mid-market deals. The goal is rapid expansion, synergy realization, and the integration of critical technologies. Energy, defence, biopharma, and technology assets are expected to remain highly attractive, and as the "tariff fog" clears, we anticipate an improved pipeline of deals for consumer-focused businesses.
03 U.S. M&A market set for a major rebound
While M&A market performance in Europe and APAC showed improvement throughout 2025, the most dramatic turnaround was undoubtedly in North America. Following ten consecutive negative quarters, North American buyers achieved significantly improved results, a momentum we expect to extend well into next year. Robust GDP growth, coupled with the Federal Reserve’s signals for additional rate cuts, are easing financing conditions and driving increased strategic activity across the region into 2026, despite ongoing policy uncertainty and market volatility.
04 Private equity: the rise of continuation funds
Private equity-backed deals are projected to see a significant rise in 2026. This surge is supported by over $2 trillion in undeployed capital, improved exit opportunities, and less restrictive debt markets. A notable development will be the acceleration in the use of continuation funds, moving them from a niche strategy to a mainstream practice. These funds allow PE firms to transfer portfolio assets from existing, maturing funds into new vehicles, enabling existing investors to cash out while attracting fresh capital.
05 AI boom brings fresh risks to dealmaking
Artificial intelligence (AI) has rapidly emerged as a game-changer in the fast-paced M&A world. Corporates are increasingly leveraging AI to accelerate and enhance every stage of dealmaking – from scouting high-potential targets and conducting deeper due diligence to streamlining post-merger integration. However, these innovative technologies also introduce new complexities and risks. Issues related to adoption, governance, and the reliance on human expertise must be carefully managed. Addressing these challenges will be paramount to unlocking the full potential of AI in M&A and ensuring successful outcomes.
An optimistic outlook
Our outlook for M&A remains optimistic, with forecasts pointing towards increased activity driven by larger deals focused on achieving scale, fostering innovation, and expanding market reach. While volatility will undoubtedly remain a persistent challenge, and CEOs should be prepared for longer planning timelines, history consistently shows that periods of turbulence can offer the greatest potential to create significant value. It's an exciting time to be in M&A.
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