While several recent reports expressed confidence that the recent upsurge in hefty M&A deals will continue into next year, it’s reasonable to wonder how solid those expectations truly are.
After all, a year ago, predictions for 2025 were similarly upbeat following the second presidential election of Donald Trump, but the expectations went mostly unfulfilled during the first half of the year, largely in response to uncertainty related to the president’s tariff regime.
If anything, prospects for global geopolitical disturbances are just as weighty now, if not more so.
“Tariff volatility and geopolitical rifts will persist in the months ahead,” said David Dean, managing director for M&A consulting with Willis Towers Watson, in a release on Wednesday. “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.”
Still, a combination of pent-up demand, a rising stock market and steady interest rates fueled a surprising turnaround in the second half of 2025, particularly at the high end of the M&A market.
Eight mega-deals — those valued at more than $10 billion — closed in the third quarter alone, the most in any quarter since the final three months of 2018. The market for “large” deals (valued over $1 billion) experienced a similar surge.
That trend likely will continue in 2026, but buyers’ motivations may be shifting, according to Dean. “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 optimization, rather than [pursue] higher-risk, one-off transformative deals,” he said.
Dean named energy, defense, biopharma and technology as sectors that will continue to attract strong interest in the coming year. Consumer-focused businesses aren’t looking quite as strong, given the present cost-of-living pressures, but “an improving pipeline of deals is anticipated as the tariff fog clears.”
Technology startups hoping for a big exit via acquisition in 2026 may find a ready market — but one with a catch, according to Alex Wu, managing partner of CFO Advisors.
Such startups will “need to prove that they can tap into payroll budgets, not just software budgets,” said Wu. “Payroll budgets are 10 times as large. That means companies looking to raise a giant valuation need to prove their tech can cut down on hiring. It’s not just about making current employees more productive.”
Willis Towers Watson noted that private equity-backed deals are expected to rise in 2026, thanks to more than $2 trillion in undeployed capital and less restrictive debt markets.
The AI boom is another major factor shaping the current M&A market. Companies are “applying AI to accelerate and enhance dealmaking, from scouting high-potential targets and conducting deeper due diligence to streamlining integration,” said Dean.
