The global M&A boom hasn’t hit the brakes… but it is off the accelerator
Following a surge in dealmaking over the first half of the year, M&A activity moderated in the third quarter. Inflationary pressures and expectations of higher interest rates have increased the cost of capital and made some transactions more difficult to execute at the margin. According to LSEG data, the value of global transactions across the quarter fell below $1 trillion – the first time it has done so since the US administration imposed global tariffs in 2025.
Market actors had previously expected that total deal value across 2026 could eclipse 2021 levels, which marked a banner year for global M&A. That prospect now appears less certain. Higher yields are placing greater pressure on valuations and financing structures, exposing some potential transactions to increased scrutiny. This has been seen through a number of abandoned deals, such as the proposed $400bn merger of AstraZeneca and Bristol Myers Squibb.
To say that the market is experiencing a slowdown, however, doesn’t quite reflect the full picture. After an exceptional start to the year, the third quarter looks to be a normalisation of activity rather than a fundamental change in the underlying M&A environment. And with November’s mid-term elections potentially presaging a more hawkish anti-trust regime in the US over the coming years, there certainly remains room for a bounce back in the fourth quarter ahead of any changes.
AI is both driving deal flow and adding risk
As with all aspects of life, AI is continuing to transform the M&A market. For many acquirers, transactions offer a faster and more effective route to new technology, talent and capabilities than developing them organically. This remains one of the brighter areas of an otherwise more cautious market. Boards are looking to accelerate technological transformation, strengthen competitive positioning and build resilience in the face of disruption.
Acquisitions can provide immediate scale and help businesses respond to technological change – pointing to an increasingly compelling rationale for bidders. The strategic opportunity therefore is significant, but so too is the risk. Stakeholders need to be convinced that acquirers are not paying a premium for capabilities that may not prove differentiated or durable.
Investors remain ready to deploy capital where the deal rationale is clear
For all the talk of more limited activity, we have seen several megadeals over the last quarter. Globally, there were 10 deals with a value of over $10bn across the quarter, including the €13bn acquisition of Deliver Hero by Uber Technologies and Monte dei Paschi’s $32 billion takeover proposal for Banco BPM.
The broader trend is clear – while volumes may be lower, deal value remains high. Strategic and financial buyers continue to be prepared to commit significant capital where the opportunity is sufficiently compelling.
This points to a continued appetite for acquisitions; especially from strategic players. The threshold for action, however, remains high – especially if all stakeholders are to be carried alongside market participants.
In this environment, the role of communications in transaction success remains critical
Where dealmakers can set out the rationale for a transaction in a convincing manner, using the right channels and directing the right messages to the right audiences, they are better placed to make their case in a compelling and persuasive way.
In a more selective M&A market, that can make the difference when it comes to delivering a successful deal.
