McKinsey Forecasts M&A Rebound

The M&A market's recovery is proving to be top-heavy, characterized by a surge in "megadeals" valued over $5 billion. While overall global deal volume remained flat in 2025, deal *value* rose sharply by 36-43%, driven by a near-doubling in the number of transactions over $10 billion compared to the previous year. This trend points to a "K-shaped" recovery where large, well-capitalized buyers are driving activity. A key factor fueling this resurgence is a more favorable financing environment. Stabilizing interest rates and the increased availability of private credit are giving dealmakers greater confidence and flexibility in structuring large, complex transactions. This contrasts with the more constrained financing conditions that dampened activity in previous years. Private equity firms are under significant pressure to act, which is expected to catalyze more activity in 2026. These firms are sitting on a record $1.7 trillion in "dry powder" (unspent capital) and need to monetize aging portfolio companies, with an estimated 55% of sponsor-backed businesses held for five years or more. This dynamic is expected to lead to both increased acquisitions and a rise in exit activity. Technology, particularly AI, remains the central pillar of M&A strategy. Companies are aggressively pursuing acquisitions to gain critical AI capabilities, data, and infrastructure rather than building them from scratch. In 2025, the technology sector led megadeal activity with 26 announced deals, the highest of any sector. Beyond tech, sector convergence and strategic repositioning are driving consolidation. The energy transition is fueling deals in the energy and utilities sector, while financial services firms are consolidating to gain scale and technological advantages. The healthcare and life sciences sector also remains a consistent hub of M&A activity. From a quantitative perspective, AI is not just a deal driver but is also transforming the M&A process itself. AI-powered tools are now used for more precise due diligence, enhanced target identification, and even to analyze cultural and operational fit to ensure smoother post-merger integration. This allows for faster, more data-driven decision-making throughout the deal lifecycle. Looking regionally, North America led the 2025 rebound with a 52% year-over-year increase in M&A value, reaching approximately $2.65 trillion. Europe and the Asia-Pacific region also saw significant growth, with APAC's M&A value climbing 33% to around $1 trillion, boosted by a record number of megadeals.