M&A bullish heading into 2026 as ‘buy and build’ deals gain traction
Pent-up demand, stock market highs and steady interest rates have fuelled a surge in M&A activity that gives buyers hope of a strong finish to 2025. According to Jana Mercereau, head of Europe M&A consulting at WTW, dealmakers should be aware of five key trends for the coming year.
Many markets have struggled earlier in 2025, thanks to unpredictable economic and geopolitical conditions. In the first six months of the year, for example, total IPO proceeds in Europe reached €4.0 billion driven by 16 IPOs in Q1 raising €3.1 billion – a considerable fall from the same period in 2024, which saw €11.5 billion raised. In the UK, the mergers and acquisitions (M&A) market for the first half of 2025 recorded a total deal value of £57.3 billion – something PwC research suggested was a 12.3% decline compared to £65.3 billion in the same period last year.
However, the market looks to be turning a corner, according to new analysis from WTW experts. Global firms involved in M&A action earlier in the year have “outclassed companies not involved in dealmaking during the first nine months” of 2025, according to the research, based on share price performance.
In partnership with the M&A Research Centre at Bayes Business School, the data shows that the M&A market is on track to achieve its best performing year since the dealmaking boom that followed the pandemic slowdown, paving the way for a stronger year ahead.
Jana Mercereau, head of Europe M&A consulting at WTW, said, “Next year, large-scale M&A will be underpinned by a drive to de-conglomerate in order to ‘buy and build’ in the pursuit of portfolio optimisation - rather than higher risk, one-off transformative deals."
Adding to that, pent-up demand, stock market highs and steady interest rates have fuelled a surge in M&A activity that gives buyers hope of a strong finish to 2025. As a result, Mercereau asserted there were five key trends companies should track for 2026.
- Finding the upside of uncertainty
After a turbulent start to 2025 marked by aggressive tariff policies and geopolitical tensions, the recent M&A surge suggests a recalibration in the market. WTW believes that buyers have learned to normalise and move through uncertainty, supported by lower financing costs and increased confidence in future growth prospects.
“At the same time, tariff volatility, geopolitical rifts and regulatory hurdles will persist in the months ahead,” Mercereau explained. “With more companies going for scale, early integration planning during the due diligence phase may prove one of the toughest tests for buyers looking to lock in gains and drive long-term, sustainable growth.”
- Return of big deals sparks optimism
“Eight megadeals (valued over $10 billion) closed in the third quarter of 2025, the highest since the final three months of 2018. With a similar rise in large deals (valued over $1bn), this uptick signals growing optimism in the market. Next year, large-scale M&A will be underpinned by a drive to de-conglomerate in order to ‘buy and build’ in the pursuit of portfolio optimisation - rather than higher risk, one-off transformative deals. With a focus on core strengths, this back-to-basics approach will gain traction, particularly in mid-market deals, as buyers make smaller, complementary acquisitions to achieve rapid expansion, synergies and integrate critical technologies.
Mercereau went on, “Energy, defence, biopharma and technology assets will continue to attract healthy interest in 2026. While cost of living pressures have taken the shine off consumer-focused businesses, an improved pipeline of deals is anticipated as the tariff fog clears in the coming year.”
- US M&A market set for major rebound
“M&A market performance in Europe and APAC improved through 2025, yet the most dramatic turnaround in deal performance was in North America. Following ten consecutive negative quarters, North American buyers achieved significantly improved results, with momentum expected to extend into next year.
“Despite ongoing policy uncertainty and market volatility, robust GDP growth coupled with the Federal Reserve’s signal for additional rate cuts are easing financing conditions and driving increased strategic activity into 2026.”
- Private equity: Rise of continuation funds
Private equity-backed deals are projected to rise in 2026, thanks to more than $2 trillion in undeployed capital, better exit opportunities and less restrictive debt markets. Use of continuation funds will accelerate, moving from niche to mainstream, allowing PE firms to transfer one or more portfolio assets from existing, maturing funds into new vehicles.
“This will enable existing investors to cash out and fresh capital to buy in,” said Mercereau.
- AI boom brings fresh risks to dealmaking
“AI has rapidly emerged as a game changer in the fast-paced M&A world. Corporates are applying AI to accelerate and enhance dealmaking - from scouting high-potential targets and conducting deeper due diligence to streamlining integration.”
She added that as innovative technologies “introduce new complexities and risks, relating to adoption, governance and reliance on human expertise”, they must be carefully managed. Addressing these challenges will be key to unlocking the full potential of AI in M&A.
Mercereau concluded, “The M&A outlook is optimistic, with forecasts indicating increased activity driven by larger deals focused on scale, innovation and market expansion. While volatility remains a persistent challenge and CEOs should be prepared to plan longer timelines, history shows that periods of turbulence can offer the greatest potential to create value.”
