The new dealmaking dynamics: what 2025 taught executives about winning the next M&A cycle

February 2026 | SPOTLIGHT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

February 2026 Issue

In 2025 there were fewer transactions but bigger convictions. The centre stayed cautious. The top end accelerated. And the question ‘can we close?’ became just as important as ‘what’s the price?’

This was what many dealmakers were focused on all year: moderating inflation, a steadier rate outlook, improving credit markets and a renewed push for scale. Although artificial intelligence (AI) capability created real tailwinds, volatility, valuation gaps and policy uncertainty forced selectivity. Overall, these factors created a certain equilibrium.

The numbers reflected this shift. By the end of Q3 2025, globally announced M&A deals were valued at roughly $3 trillion, up 33 percent year over year (YOY) – already the strongest opening period since 2021. Through 30 November, global announced volumes reached about $4.5 trillion (up 39 percent YOY), even as the number of transactions fell by 8 percent. Value is rising faster than volume because strategic buyers are concentrating on fewer but bigger and more strategic transactions.

For executives, the implication is straightforward; M&A is not a ‘capital markets’ activity you toggle on when conditions feel friendly. M&A should be bespoke: part strategy, part risk engineering and part stakeholder management. The winners in 2026 will not be the companies that do the most deals, rather they will be the ones that can do the right deals quickly, credibly and that will pass regulatory scrutiny.

The rapid adoption and utilisation of AI is compressing strategic timelines in virtually all sectors and geographies. Supply chains are being redesigned. Regulation is reshaping industry structure. And investors are less patient with ‘conglomerate drift’. The result is that many 2025 transactions were less about incremental growth and more about decisive repositioning.

When companies made acquisitions in 2025, they often acquired targets that would change their trajectory: secure data and infrastructure, modernise product delivery, lock in strategic inputs or consolidate to defend margin. When they sold, they sold to make the story coherent and fund the next wave of investment. Put differently: M&A is increasingly how leadership teams rewrite the company’s operating thesis and not how they add a footnote to it.

A practical question for boards in 2026: what are we willing to do in order to be perfectly positioned in three to five years and what assets, capabilities and constraints come with that choice? Indecision is a strategy you did not mean to pick. When confidence returns, processes get combative. As we have seen in 2025, contested dynamics including topping bids, hostile approaches and ‘go straight to shareholders’ tactics returned because capital and urgency returned at the same time.

Two recent examples are evidence of this. In healthcare, the bidding battle for obesity-focused biotech Metsera became a test of speed, narrative and risk, culminating in a roughly $10bn transaction. In media, Warner Bros. Discovery has become the centre of a high-profile hostile bid following competing proposals and public positioning around strategy and regulatory clearance.

The executive lesson is ‘prepare for hostility’. It is that certainty of closure that is once again a key bid feature. In many auctions, the winning proposal will not simply be the highest number – it will be the one with the clearest path through regulators, financing and shareholder dynamics. This is where operating discipline becomes a necessity. If you want optionality, you need readiness, internal alignment on walk-away issues, crisp communications plans and a governance process that can move with speed without sacrificing rigour.

Sponsors did not return to 2021 behaviour in 2025; rather they returned with discipline, more conservative leverage, heavier operational underwriting and a sharper focus on assets with durable cash flows and real strategic optionality. The marquee private equity deal was easily the $55bn take-private of Electronic Arts by a sponsor consortium, reported as the largest leveraged buyout on record.

For corporates, this matters in two directions. Sponsors are tougher competitors in auctions, particularly where the target requires operational change or structural complexity. But they also expand the buyer universe for carve-outs and portfolio exits – good news for companies trying to reshape faster than organic change allows.

The biggest regulatory shift of 2025 was not simply ‘tougher’ or ‘easier’. It was more engineered. The market saw a renewed willingness to resolve deal concerns through targeted structural remedies without abandoning enforcement.

Two cases became markers. The US Federal Trade Commission’s final divestiture order for Synopsys/Ansys required divestitures in specific software tool markets. The US Department of Justice’s settlement framework in Keysight/Spirent required divesting certain Spirent business lines to Viavi as a condition to proceed.

The practical consequence for executives is simple: regulatory strategy cannot be a post-signing workstream. A deal-design mindset is needed, pre-mapping likely issues, defining what can be divested or firewalled, and embedding those choices into valuation, messaging and contract terms. In 2026, the organisations that win will not be the ones that complain about the rulebook. They will be the ones that design around it.

In strategic sectors, the government is not just a regulator. It can be a participant with capital, contractual rights and long-term interests.

In August 2025, the US government agreed to buy 433.3 million primary shares of Intel at $20.47 per share for a 9.9 percent stake, paired with a five-year warrant for an additional 5 percent tied to Intel’s foundry ownership. In July 2025, the Department of Defense invested $400m in MP Materials as part of a public-private partnership designed to expand US rare earth magnet supply, including long-term commercial commitments and a price floor.

These were not one-off headlines. They are a signal that ‘stakeholder mapping’ now includes agencies with durable interests that may not align neatly with quarterly earnings per share. Government capital can stabilise strategic industries, but it can also introduce constraints on governance, disclosure and long-term strategic flexibility. Executives should assume ‘political durability’ is part of the underwriting where national priorities are in play.

Cross-border M&A did not disappear. But it increasingly sorts investors and counterparties into categories.

The Trump administration’s America First Investment Policy memo emphasises welcoming passive investment while tightening oversight related to national security and ‘foreign adversaries’. The Treasury’s May 2025 announcement of a ‘Known Investor’ portal signalled a parallel effort to streamline review for capital from allies and partners. Meanwhile, Committee on Foreign Investment in the United States reporting continues to highlight heightened attention to non-notified transactions and compliance enforcement. The European Union has signalled that it will significantly strengthen its foreign direct investment (FDI) screening regime.

The executive takeaway is operational: treat FDI review like core diligence. Identify sensitive technology and data touchpoints early, plan governance and information controls, and be ready to explain how the post-close ownership and access model reduces risk.

If 2025 was the year the megadeal returned, 2026 will be the year execution separates leaders from laggards. The five actions outlined below are worth putting on the board agenda now.

First, re-anchor the M&A thesis to the AI-era strategy. Define the capabilities that must be owned, the assets that must be exited and the constraints that must be accepted.

Second, make regulatory strategy part of valuation. Pre-map remedies and mitigation. Decide what can be divested, licensed, firewalled or governed differently, and price those outcomes in before signing.

Third, compete on certainty of close. In contested situations, speed and credibility can beat price. Align board approvals, financing and disclosures to move decisively.

Fourth, expand diligence beyond ‘financial and legal’. In many deals, the real value is in data rights, model training inputs, cyber security posture and intellectual property provenance. Treat these like core assets.

Lastly, assume multi-stakeholder governance. In strategic sectors, government interests can persist long after closing. Build the post-close operating model accordingly.

The headline is not that M&A is ‘back’, it is that M&A is different. The leaders who win the next cycle will be the ones who design for complexity and execute with the confidence that comes from preparation.

Frank Aquila is a partner at Sullivan & Cromwell LLP. He can be contacted on +1 (212) 558 4048 or by email: aquilaf@sullcrom.com.

Frank Aquila

Sullivan & Cromwell LLP