What to expect next year in M&A

Dealmakers: Get ready for a busy 2026.

A recent pickup in deal activity, favorable macroeconomic factors, and mounting pressure for dealmakers to get off the sidelines all suggest that next year will be a busy one for M&A, experts told CFO Brew.

“The amount of activity we see and that we’re working on, we’re very optimistic that that momentum is going to continue on to ’26,” Elizabeth Kaske, EY-Parthenon global and Americas M&A leader, said.

Status report. This year started off slower than some expected, due to some dealmaking headwinds (think: tariffs). But market observers noted that activity has picked up in recent months. EY research into US deals valued at $100+ million found that between January and October, total deal value increased 45% YoY to nearly $2.1 trillion, and volume increased 10.4% to 1,409 deals.

Megadeals such as Union Pacific’s $85 billion acquisition of Norfolk Southern helped fuel the uptick. According to PwC, the number of large deals ($1 billion to $5 billion in value) and megadeals (over $5 billion) were on pace to finish 17% and 31%, respectively, ahead of 2024, based on deals recorded through early September.

The technology sector, and more specifically the rush to adopt AI technologies, also drove dealmaking. The tech sector racked up 446 deals valued at $658 billion through October, “making it the undisputed winner in volume and value,” according to the EY report. Activity came from tech companies buying other tech companies—like Google’s $32 billion acquisition of Wiz—but also non-tech companies making an acquisition. Tech M&A activity came from “the AI gold rush,” SaaS, and cybersecurity deals, according to Kaske.

“Our prediction is not only [that] tech and non-tech [companies] want to buy the technology, but also the advancement of technology is going to continue to drive further dealmaking around consolidations and simplification,” she said. “Certain industries that are going to be disrupted by certain tech indicators are then going to have to consolidate to stay relevant.”

Roughly a quarter of megadeals involved AI in some way, according to PwC. Deals in this bucket either involve AI-related power demands or data center projects, like a BlackRock-led group’s acquisition of Aligned Data Centers, or one company acquiring another for its AI capabilities, like IBM’s acquisition of Seek AI. Kevin Desai, PwC US and Mexico deals leader, called AI “the most dominant catalyst in 2025” for dealmaking. “There’s been a surge in large, reshaping-type of deals all up and down the AI landscape,” he said.

Reasons for optimism. Experts said they’re optimistic that this momentum will carry into 2026, because macro conditions like more M&A-friendly regulators and easing interest rates are conducive to dealmaking. Meanwhile, private equity firms and corporations are likely feeling the pressure to get moving on deals.

They also noted that, nearly a year into the Trump administration’s second term, they have a better grasp of what to expect out of Washington. After a chaotic start to the year, trade policy has more or less settled into a rhythm, minus a pending Supreme Court tariff decision. The FTC has eased up on its antitrust enforcement compared to the Biden administration. The Federal Reserve’s actions on interest rates also help boost M&A activity.

Kaske said there’s “pent-up demand, not only on the corporate side for inorganic growth…but also on the private equity side of capital that needs to be deployed. And so, all of those things combined create this perfect storm of a frenzy of dealmaking that’s…unfolding here in the fall.”

Desai said PE firms need more corporations to get off the sidelines to buy the assets that PE has fixed up to sell in recent years. He added that over the last few years, a lot of PE activity has been one PE firm buying from another.

“Eventually, in order to actually return money to LPs, they need to be able to exit this outside the PE ecosystem,” Desai said. “You need to get it into corporate’s hands, or you need an IPO.”

Larry Roseman, CFO of Thumbtack, said the choice whether to go public “will be top of mind” for CFOs of private companies. Those that raised money a few years back “have tightened costs but may not be capitalized for the next phase of growth and can’t easily tap traditional financing markets,” Roseman told us in an email. “That sets the stage for increased M&A as CFOs and boards evaluate whether value is maximized by going it alone or pursuing consolidation.”

EY found that global IPO volume increased 19% YoY in Q3. The US was a primary source of Q3 activity, and had “its strongest IPO quarter since Q4 2021,” according to the firm.

Kaske warned of one potential M&A headwind: geopolitics. New tensions or trade barriers may shift the calculus on a deal, depending on the involved companies’ exposure. “That’s one variable relative to dealmaking that always needs to be considered, but right now, in the current environment, could change,” she said.