The resilience of transatlantic M&A in a more demanding market
May 2026 | SPECIAL REPORT: MERGERS & ACQUISITIONS
Financier Worldwide Magazine
May 2026 Issue
Over the past year, several high-profile transactions have highlighted sustained transatlantic M&A activity. In July 2025, a consortium led by TPG acquired Germany’s Techem, an energy services company, for approximately $7.5bn. In October 2025, Merck completed its $10bn acquisition of Verona Pharma, a biotech company headquartered in London. That same month, DoorDash closed its £2.9bn purchase of Deliveroo, one of the UK’s most popular food delivery platforms.
These transactions were executed in a market defined by materially higher borrowing costs, tighter credit conditions and expanded foreign investment review on both sides of the Atlantic. In the last several years, antitrust scrutiny has intensified and geopolitical tensions have complicated supply chains and energy policy across Europe. Historically, markets operating under these conditions have generally seen more selective, restrained cross-border activity. But the last five years have deviated from this paradigm. According to Mergermarket, average quarterly transactions between North America and Western Europe have been approximately 50 percent higher than in the preceding five-year period, and deal volumes have remained elevated in both directions. Lazard reports that in 2025, the US and Europe remained each other’s leading cross-border partners, with nearly half of their respective cross-border deal activity flowing between the two regions.
PitchBook analysis adds useful context on how capital has moved within those flows. Last year, European acquirers deployed $61.4bn more into North American markets than North American buyers deployed into Europe, reversing an eight-year period in which capital flowed more heavily in the opposite direction. While North American buyers continued to execute a significant number of transactions in Europe, this shift in relative capital deployment underscores the bilateral nature of transatlantic dealmaking and the diversity of investment priorities on each side of the Atlantic.
Structural drivers of transatlantic M&A activity
Those differences in investment patterns point to distinct incentives shaping activity on each side of the Atlantic. For US buyers, relative pricing between markets has been a meaningful consideration. Since the middle of the last decade, the US dollar has generally traded at stronger levels against sterling and the euro than in earlier years, increasing the purchasing power of dollar-based acquirers evaluating assets denominated in European currencies. However, as the dollar weakened last year, we saw capital flows quickly swing in the other direction.
At the same time, broad Western European public equity markets have traded at a meaningful valuation discount to US markets. Forward price-to-earnings ratios for European indices have generally remained below those of comparable US benchmarks, and PitchBook data indicates that leveraged buyout multiples in the US have averaged approximately 10 percent higher than in Europe. Taken together, these valuation differentials have made certain Western European assets comparatively less expensive for North American strategics and sponsors than similar businesses at home.
For European acquirers, the attraction of the US is different. The US remains the deepest capital market globally and, in many industries, the largest end market. Economic growth in the US has outpaced that of much of Western Europe, expanding relative opportunity in certain sectors. Acquisitions in the US can provide scale, liquidity and broader investor access not readily available domestically, and in many industries, US assets sit at the centre of global customer and innovation networks. These structural advantages continue to draw European buyers even as financing conditions have become more selective.
The sector composition of transatlantic activity reinforces these dynamics. Technology, media and telecommunications transactions account for roughly one-third of deal volume between North America and Western Europe. When business services, industrials and healthcare are included, those four sectors represent close to three-quarters of overall activity. Many companies in these industries already operate across jurisdictions, whether through multinational customer bases, distributed supply chains, regulatory frameworks or intellectual property portfolios that assume global commercialisation. In such sectors, cross-border acquisitions frequently serve as a foundation for further expansion across both markets, contributing to sustained deal activity over time.
The depth of today’s financing markets has also contributed to sustained transatlantic M&A activity. European private credit has grown significantly over the past two decades and now routinely funds acquisitions by overseas sponsors. Cross-border borrowers can access lenders in both North America and Europe, and sponsors frequently evaluate parallel financing options before committing to a structure. Although leverage levels remain below pre-2020 market peaks, financing remains available for businesses with durable cash flows and credible integration strategies.
Implications for dealmakers
For dealmakers operating across the Atlantic, regulatory strategy must be integrated into transaction architecture from the outset. National security review in the US through Committee on Foreign Investment in the United States and expanded foreign direct investment screening across Western Europe have increased the number of transactions subject to review. Merger control authorities on both sides of the Atlantic continue to scrutinise concentration in strategic sectors, and multijurisdictional filings are now routine for cross-border combinations. For transatlantic transactions, sequencing decisions, remedy risk and approval timelines can materially influence financing commitments, integration planning and outside dates. Regulatory planning is therefore not a discrete legal workstream but a structural component of cross-border execution.
For lawyers advising on transatlantic transactions, transaction architecture and documentation discipline are central to execution. Cross-border transactions require alignment of public disclosure obligations, regulatory approval processes and shareholder approval thresholds across multiple legal regimes. In public transactions, counsel should draw upon familiarity with established Western European governance and takeover frameworks – including the UK Takeover Code and analogous continental regimes – to inform bid structure, shareholder engagement strategy and timeline management. Precision in drafting closing conditions and termination rights is particularly important where regulatory sequencing may affect outside dates. Counsel should also anticipate information governance and clean team protocols in transactions involving overlapping markets or sensitive data.
For financial advisers, sustained transatlantic activity requires deliberate capital structure planning across currencies and jurisdictions. Where assets generate cash flows in sterling or euros and debt is raised in dollars, advisers should assess whether financing can be aligned with operating currency exposure or whether hedging strategies are appropriate over anticipated approval periods. Approval timelines across multiple regimes may also affect financing costs and cash flow assumptions. Financial modelling should reflect how currency, leverage and timing interact over the life of the transaction.
For boards, transatlantic transactions require disciplined judgment about risk-adjusted returns across jurisdictions. Relative pricing gaps and structural incentives may create opportunity, but cross-border combinations introduce exposure to regulatory timing, currency fluctuation and integration complexity. Directors should expect management to present a unified analysis of these risks, rather than reviewing valuation, financing and regulatory considerations in isolation. Transatlantic transactions also elevate stakeholder considerations. Where ownership shifts across jurisdictions or nationally significant assets are involved, public narratives and political reactions may influence how a transaction is received, even when formal approval thresholds are met. Boards should incorporate communications strategy and stakeholder alignment as part of transaction planning and assess whether projected returns adequately compensate for the additional jurisdictional risk inherent in cross-border execution.
For sponsors, sustained transatlantic activity shapes portfolio construction across regions. Establishing a platform in Europe may create opportunities for follow-on acquisitions in the US, and vice versa, particularly in sectors where customers and supply chains already operate globally. Sponsors should evaluate how cross-border presence affects add-on sequencing and leverage strategy over the life of the investment. Where an asset may ultimately be exited in a different jurisdiction from where it was acquired, exit planning should account for differences in likely strategic buyers and valuation benchmarks across regions.
Looking ahead
The past five years have demonstrated the resilience of the transatlantic corridor. The next phase is likely to be shaped as much by sector momentum and geopolitical calibration as by broader macroeconomic conditions. For example, healthcare M&A increased 35 percent in 2025, and the pharmaceutical industry faces a projected $150bn patent cliff through 2027. Those pressures are accelerating discussions of larger combinations, particularly among European companies seeking exposure to the scale of the US market. Cross-border activity in life sciences is therefore likely to remain prominent.
Technology presents a similar dynamic. Technology M&A expanded sharply in 2025, with strategic buyers leading activity across both North America and Western Europe as companies pursue AI capabilities and data infrastructure. The imperative to secure technological scale remains strong on both sides of the Atlantic, reinforcing transatlantic deal flow in priority sectors.
At the same time, heightened localisation pressures in advanced economies may influence how companies prioritise cross-border expansion. Both the US and the European Union (EU) are investing heavily in domestic competitiveness in sectors such as semiconductors, digital infrastructure and biopharma, encouraging firms to weigh domestic capacity building alongside international growth. Industrial policy incentives, supply chain realignment and evolving export control and trade restriction regimes may shape where capital is deployed and how partnerships are structured.
Localisation pressures are more likely to influence the direction of transatlantic deal flow than to materially reduce it. As both the US and the EU prioritise domestic competitiveness in strategic sectors, cross-border activity may concentrate in industries aligned with policy objectives and supply chain priorities. Even so, North America and Western Europe remain institutionally aligned, technologically complementary and deeply integrated capital markets. Compared with more geopolitically strained corridors, the US-EU relationship remains relatively stable, providing a predictable foundation for cross-border capital deployment.
Conclusion
North America and Western Europe remain each other’s primary cross-border partners because the economic incentives linking the two markets remain compelling. Companies will continue to pursue transactions across the Atlantic where scale, market access and sector alignment justify added complexity. In a more demanding market, however, success will depend less on valuation alone and more on disciplined structuring and coordination across jurisdictions from the outset.
Frank Aquila is a partner and Catherine Yuh is an associate at Sullivan & Cromwell LLP. Mr Aquila can be contacted on +1 (212) 558 4048 or by email: aquilaf@sullcrom.com. Ms Yuh can be contacted on +1 (212) 558 4000 or by email: yuhc@sullcrom.com.
© Financier Worldwide
BY
Frank Aquila and Catherine Yuh
Sullivan & Cromwell LLP