Megadeal resurgence: strategy, scale and scrutiny

October 2026  |  COVER STORY | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

October 2026 Issue

M&A activity in 2026 is defying a multitude of disruptions. Against a backdrop of shifting US trade policy, heightened geopolitical tensions, ongoing concerns over energy prices and broader market uncertainty, deal value picked up markedly in the first half of 2026 following a period of caution.

As of 30 June, announced M&A activity had reached approximately $2.8 trillion worldwide – putting 2026 on course for a record year that would surpass the 2021 boom year. A large number of these transactions were megadeals, typically defined as transactions valued at more than $10bn.

According to LSEG, a total of 48 megadeals valued at $10bn or more were announced globally in the first half of 2026, accounting for around 45 percent of all M&A value. This compares with 30 and 18 during the same periods in 2025 and 2024 respectively. Collectively worth $1.3 trillion, the activity underscores the increasingly dominant role of large-scale transactions in driving the market.

Regionally, US megadeals, 31 of which were valued at $10bn or more, accounted for 59 percent of total US deal value, up from 36 percent in 2025. Across Europe, the Middle East and Africa, megadeals drove an 84 percent year-on-year increase, as European companies announced transactions spanning domestic consolidation, regional expansion and global reach. In the UK, five deals exceeded £10bn in value, including two worth more than £20bn.

“Historically, volatility and uncertainty tend to weigh on boardroom confidence, yet dealmaking has continued at a robust pace, particularly at the upper end of the market,” says Lucille Jones, senior manager, deals intelligence at LSEG. “Despite ongoing geopolitical tensions and economic uncertainty, momentum accelerated in the second quarter, with companies demonstrating remarkable resilience.”

Expansion amid contraction

While blockbuster transactions drove global deal values during the first half of 2026, the overall number of announced deals contracted, with around 21,340 transactions announced globally compared with 21,978 during the same period in 2025, according to Dealogic.

PwC, in its analysis of first-half deal activity, found that mid-market and smaller transactions, which account for the majority of M&A activity, remain subdued. Confidence remains uneven and dealmaking increasingly selective. The result, it says, is a K-shaped market, with large, US-led and technology-driven deals powering activity while much of the rest of the market remains constrained by valuation gaps, execution risk and lingering uncertainty.

“The global M&A market is polarised, with staggering growth in large-cap deals, while mid- and small-cap deal volumes continue to decline,” observes Simon Heath, a partner at the Heligan Group. “At the upper end of transaction size, megadeals in excess of $10bn have enjoyed a rich seam of consistent completions, as the shackles of the past couple of years have not just been broken, but completely pulverised.”

Key drivers

Megadeals continue to dominate the strategic landscape as companies pursue scale and capability in a rapidly changing business environment. Acquirers are seeking to expand operations, close capability gaps and secure critical technologies, particularly in artificial intelligence (AI).

At the same time, companies are increasingly pursuing transformational acquisitions as a faster alternative to organic growth. With competitive pressures intensifying across multiple industries, boards are seeking opportunities that deliver immediate market access, operational efficiencies and strategic resilience. This shift reflects a growing belief that scale, technology ownership and specialised talent will be essential competitive advantages in the years ahead.

In PwC’s ‘Global M&A Industry Trends 2026 Outlook’, AI is identified as playing an increasingly central role in transaction strategy. Approximately one-third of the 100 largest corporate M&A deals in 2025 referenced AI as part of their strategic rationale. According to the report, AI is accelerating strategic change across industries by reshaping decisions around scale, capabilities, data, talent and deal execution.

“Technology has been a key driver, in terms of both deal volume and transaction value, with particularly strong momentum across AI, software and semiconductors,” says Ms Jones. “The sector accounted for nearly a quarter of global M&A value in the first half of the year, supported by significant capital investments in companies such as OpenAI and Anthropic. These investments reflect the race among technology companies and investors to build and strengthen AI capabilities.”

Beyond funding rounds, headline technology transactions, which generated approximately $875bn across 5316 announced deals, included SpaceX’s acquisition of Cursor in a $60bn stock transaction following the rocket company’s public listing, Qualcomm’s purchase of AI start-up Modular for an estimated $3.9bn, and Salesforce’s acquisition of AI customer service platform Fin for $3.6bn.

Private equity

Also contributing significantly to megadeal activity is the large volume of private equity (PE) capital available for deployment. In Europe, for example, megadeals accounted for an increasing share of overall value, driven by a wave of take-private transactions.

According to PitchBook’s ‘Q2 2026 European PE Breakdown’, the UK was the standout regional beneficiary, reasserting its position as Europe’s largest PE market despite domestic political turbulence. This was supported by its role as a primary conduit for US capital and a broader rise in cross-border dealmaking across the continent.

In the first half of 2026, megadeals increased their share of total deal value from 32.1 percent in 2025 to 35 percent, reflecting sponsors’ willingness to deploy capital at scale despite an uncertain macroeconomic backdrop. During the second quarter, 16 megadeals were announced or completed, with half concentrated in the business-to-business sector.

“Mountains of PE dry powder are ready to deploy,” points out Mr Heath. “The global large cap PE market has consistently increased the value of uninvested capital over the past three years but H1 2026 has proven a pivot point, with an increasing appetite to deploy significant capital in large global transactions, as demonstrated with the recent EasyJet/Apollo and Intertek/EQT FTSE100 deals.”

Beyond technology

Other sectors have also been driving activity, with healthcare, utilities and energy, alongside technology, accounting for the largest share of global deal value during the first half of 2026.

According to Dealogic, the utilities and energy sector generated approximately $328.1bn across 871 announced transactions. Significant transactions included NextEra Energy’s approximate $67bn agreement to acquire Dominion Energy and the $10.7bn consortium-led take-private of AES, highlighting growing demand for power generation as electricity consumption rises alongside AI-related data centre development.

Real estate also posted an exceptional first half. Announced deal value reached roughly $184.2bn across 533 transactions, the highest dollar volume since the first half of 2022. The sector was led by the proposed $69bn merger between apartment real estate investment trusts Equity Residential and AvalonBay Communities, illustrating how a relatively small number of transformational transactions continued to outweigh softer overall deal numbers.

Healthcare remained one of the market’s most active sectors, generating just over $340bn in announced transactions across 1867 deals. Megadeals in the sector included Eli Lilly’s $6.3bn acquisition of Centessa and Merck’s $6.7bn purchase of Terns Pharmaceuticals. Many transactions were aimed at replenishing pharmaceutical pipelines ahead of major patent expiries and expanding the use of AI in patient care.

“AI’s influence is being felt well beyond the technology sector,” says Ms Jones. “The rapid expansion of data centres and computing infrastructure is driving increased deal activity in energy and utilities, as companies seek the power generation, grid capacity and supporting infrastructure required to meet the growing energy demands of AI.”

Financing and execution challenges

Financing and executing an M&A megadeal presents high-stakes complexities, where even minor miscalculations can destroy billions in shareholder value.

With megadeals currently dominating global deal value, navigating their unique bottlenecks requires a sophisticated approach, according to Ogier.

The first challenge is syndicated debt constraints. Traditional bank syndicates for megadeals face stricter capital adequacy requirements and regulatory limits. To address this, buyers are increasingly turning to large private credit solutions or sharing risk through multi-lender club deals to ensure funding certainty.

The second challenge is acquisition currency and dilution. With equity markets near record highs, companies are using their own stock as a primary acquisition currency to reduce reliance on debt funding. This requires careful tax and structural planning to avoid earnings-per-share dilution and shareholder pushback.

The third challenge is valuation mismatches. Disagreements over target value frequently derail megadeals. To bridge these gaps, buyers and sellers are increasingly using earnouts and contingent value rights that tie future payments to the achievement of specific milestones, such as AI-driven revenue targets.

“AI is increasingly influencing both how companies are valued and how transactions are structured,” attests Ms Jones. “From a valuation perspective, traditional financial metrics do not always justify the premiums being paid. Instead, targets may be valued by their AI talent and differentiated AI capabilities, along with future growth expectations.

“AI is also influencing transaction structures,” she continues. “The capital requirements associated with AI development and deployment are enormous, and so we are seeing funding structures that combine equity, debt, strategic investments and convertible securities, as well as private capital and infrastructure funds.”

The fourth challenge is currency and interest-rate hedging. Cross-border megadeals often require layers of multicurrency debt to match global investor bases, creating significant foreign exchange and interest-rate exposure during lengthy closing periods.

“While some megadeals may be more straightforward as larger corporates are more sophisticated with better corporate governance and financial reporting, the primary challenges for companies, in addition to financing the deal, are regulatory or antitrust issues,” says Mr Heath.

Scrutiny factors

Megadeals continue to face exceptionally high levels of regulatory scrutiny. While certain jurisdictions, such as the US under the current Trump administration, have adopted a more flexible or pro-growth approach to remedies, scrutiny remains intense globally as enforcement agencies focus on non-traditional metrics such as data privacy, AI capability and foreign subsidies.

According to White & Case’s ‘Global Merger Control Trends and Outlook 2025-2026’, several factors continue to determine whether a megadeal succeeds, requires significant divestitures or faces outright rejection.

The first is market concentration and traditional antitrust metrics. Mergers between direct competitors face immediate evaluation to determine whether they reduce consumer choice or increase prices. Regulatory bodies such as the European Commission and the US Federal Trade Commission generally favour structural remedies over behavioural commitments.

The second is ecosystem power and data concentration. Transactions that connect multiple parts of a supply chain are closely examined to determine whether the combined business could restrict competitors’ access to critical upstream services or downstream markets. Technology and industrial megadeals are also scrutinised for their ability to aggregate vast data sets or control strategic infrastructure such as data centres.

The third is national security and geopolitical risk. Foreign direct investment screening regimes across Europe and oversight by the Committee on Foreign Investment in the United States can add months to transaction timelines, particularly in sectors involving defence, semiconductors and communications technology. Transactions affecting critical minerals, industrial automation or energy infrastructure can face particularly strong political resistance.

The fourth is operational and information risk. Regulators have expanded scrutiny of corporate conduct before formal merger approval, with penalties for ‘gun jumping’ increasing significantly. Companies must carefully manage the sharing of business plans, customer information and proprietary technology during due diligence by using clean teams and strict data-isolation protocols.

“Governments are feeling increasingly impotent to economically dominant supranational companies that operate across international markets with impunity,” says Mr Heath. “However, the one lever that governments can pull is regulatory, specifically antitrust legislation to prevent market dominance and anti-competitive behaviour.

“The EU has been baring its teeth with technology companies such as Google and its anti-competitive practices,” he continues. “Equally, national security legislation is increasingly important to protect sovereign capabilities. Dealmakers are increasingly proactive with government lobbying and undertaking regulatory diligence to ensure that these factors will not impact a potential transaction.”

Blip or permanence?

With global M&A forecast to reach $4 trillion by the end of 2026, further megadeals appear likely despite ongoing macroeconomic, geopolitical and technological disruption. Many of the factors that contributed to stronger activity in the first half of the year are expected to remain in place throughout the remainder of 2026 and beyond.

“The M&A cycle is unpredictable, trends are fashionable and often fleeting while risk appetite can ebb and flow, so forecasting how a market performs is challenging,” says Mr Heath. “Expectations would be that 2026 will continue to experience an uplift in megadeal volumes as dry powder is deployed. Beyond that, global economic conditions, geopolitical stability and market sentiment will be decisive factors as to whether the megadeal trend is a blip or a more permanent occurrence.”

Leaning toward permanence is Ms Jones. “In the short term, the race for AI will continue to drive megadeal announcements – the need to secure AI capabilities, build scale and build out AI infrastructure is creating a requirement for dealmaking,” she says. “With an easing of inflationary pressures and lower regulatory hurdles, we will continue to see megadeals announced at pace.”

Since the end of the first half, market momentum has remained strong. Activity during July and August suggests that the concentration of large-scale transactions continues, with technology, energy and infrastructure remaining among the most active sectors. While geopolitical uncertainty persists, strategic demand for scale, access to AI capabilities and improving financing conditions continue to underpin confidence at the top end of the market.

With global M&A activity surging and transaction values reaching record levels, the message is clear: megadeals have re-emerged as a defining force in the global dealmaking landscape.

© Financier Worldwide

BY

Fraser Tennant