^{Photo: The Economic Times}

Global mergers and acquisitions activity is entering 2026 with strong momentum, fueled by strategic repositioning and surging demand tied to artificial intelligence. After rebounding sharply last year, executives and investors broadly expect dealmaking to remain elevated, though tighter funding conditions are forcing companies to prioritize transactions with clearer strategic and financial payoffs.

The current environment reflects a powerful mix of technological disruption, shifting global supply chains, and improving macroeconomic sentiment, all of which are reshaping corporate growth strategies.

Deal Activity Reaches New Highs

According to data from PitchBook, the total value of global M&A transactions climbed nearly 40% in 2025 to about $4.9 trillion, surpassing the previous record of $4.86 trillion set in 2021.

The rebound followed a slow start to the year, when policy uncertainty and tariffs temporarily dampened risk appetite. As interest rates began to ease and equity markets stabilized, deal pipelines accelerated sharply, particularly in technology, healthcare, and energy infrastructure.

Advisory activity also surged, with Goldman Sachs ranking among the top deal advisors globally, working on transactions totaling roughly $1.48 trillion in aggregate value.

Executive Confidence and Strategic Drivers

Surveys across the industry point to sustained optimism. Research from Bain & Company indicates that about 80% of M&A leaders plan to maintain or increase deal activity this year, supported by improved economic visibility and a large backlog of private equity exits.

Similarly, client polling by Goldman Sachs suggests that 57% of executives see scale and strategic growth as the main rationale for acquisitions, rather than purely financial engineering.

Consultants note that companies are reassessing portfolio boundaries as geopolitical fragmentation and uneven growth prospects reshape competitive dynamics. Many firms are divesting noncore assets while targeting acquisitions that strengthen digital capabilities or expand into higher-growth markets.

Capital Constraints Temper the Boom

Despite strong appetite, funding availability is proving to be a limiting factor. Bain estimates that the share of corporate capital allocated to acquisitions fell to a 30-year low in 2025, as companies diverted cash toward dividends, share buybacks, capital expenditure, and research initiatives.

Private capital is playing a larger role in bridging the gap. Private equity firms now account for roughly 40% of global deal activity, while private credit markets — valued at about $2.1 trillion — are increasingly used to finance complex transactions.

However, the scarcity of discretionary capital means boards are scrutinizing deals more rigorously, emphasizing synergies, return thresholds, and execution certainty.

Mega-Deals and the AI Investment Wave

Large transactions have been a defining feature of the current cycle. Deals valued above $5 billion accounted for more than 70% of the increase in total deal value last year, reflecting consolidation across sectors undergoing technological disruption.

The number of transactions exceeding $10 billion reached around 60, marking one of the busiest periods for mega-deals since the early 2020s.

Artificial intelligence is a major catalyst. Companies are acquiring capabilities across the technology stack — from software and semiconductors to data infrastructure and energy supply — to secure competitive advantages as digital transformation accelerates.

Infrastructure Spending and Capital Competition

Massive investment requirements tied to AI are also reshaping capital allocation decisions. Large technology companies have been spending heavily on data centers and computing capacity, with estimates suggesting average capital expenditures of roughly $760 million per day among major hyperscalers during peak periods of the buildout phase.

Looking ahead, industry forecasts point to roughly 65 gigawatts of new global data center capacity by 2030, more than double the additions seen in the previous five years. This multitrillion-dollar investment cycle is expected to compete directly with M&A for corporate funding in the near term.

Market Sentiment and Outlook

While sentiment has improved markedly from the lows of 2022, indicators such as the M&A confidence index tracked by Boston Consulting Group remain below long-term averages, signaling a cautiously optimistic environment rather than unchecked exuberance.

Advisors expect continued consolidation in sectors experiencing rapid technological change, alongside cross-border deals aimed at diversifying supply chains and accessing new growth markets.

Bottom Line

The global M&A landscape is entering a new phase defined by strategic urgency and financial discipline. Artificial intelligence is creating powerful incentives for companies to scale, acquire capabilities, and reposition for future growth, sustaining high deal volumes into 2026.

At the same time, tighter capital conditions mean only the most compelling transactions are likely to proceed, setting the stage for a cycle where quality of deals — not just quantity — becomes the defining feature of the market.