- Pipelines, IPOs and returning confidence
- Regulatory and geopolitics: From deal risk to architecture
- Structural shifts: Carve-outs and private equity reinvention
- Technology and AI: The new deal frontier
- Looking ahead in 2026
Dealmakers are stepping into a market that feels invigorated but is more complex than ever. After a resurgence in deal activity in 2025 (global M&A volumes hit USD 3 trillion, up 33% year on year with 45 mega deals over USD 10 billion) the appetite for transformative deals is unmistakable. The message is clear: companies are thinking big again.
The market, however, is fundamentally different. Regulatory scrutiny, geopolitical instability, structural reshaping and the rise of generative AI are pushing dealmakers to move faster, think more strategically and prepare earlier than at any point in the last decade.
Pipelines, IPOs and returning confidence
Optimism has turned into conviction. “Pipelines are probably stronger than they’ve ever been,” says Adam Farlow, Baker McKenzie partner, London. “Valuations make sense again, but there are also pent-up deals that need to happen. We are incredibly optimistic.”
Narrative matters as much as numbers too and can influence where to list. Whether and where companies choose to list reflects not only valuation but visibility, storytelling and investor attention.
“We need to tell our success stories,” Farlow explains. “If you’re only paying attention to social media, then you’re only seeing meme stocks. We need to be aware of the power of telling the story of why corporates should be publicly listed and how the markets are funding growth and innovation. Investors are paying attention and ready to invest for growth.”
Regulatory and geopolitics: from deal risk to architecture
Antitrust scrutiny remains a defining feature. Regulators are increasingly focused on the long-term consequences of consolidation, particularly in AI and data-rich sectors. Scrutiny now extends beyond traditional market-share metrics to questions of innovation control, future market shaping and ecosystem dominance. With governments focused on growth and innovation, regulators are also open to engaging with dealmakers on complex deals and remedies. That does not mean an easing of enforcement. Reporting obligations are strictly enforced with continued focus on killer acquisitions and tech-AI partnerships.
Meanwhile, foreign investment regimes are intensifying. State-backed buyers face new notification hurdles under the EU’s Foreign Subsidies Regulation, while the Committee on Foreign Investment in the United States (CFIUS) remains a major roadblock with its broad and occasionally retroactive interventions. Deal teams are responding by incorporating political risk analyses into the earliest stages of deal strategy.
Geopolitics is also reshaping deal flows. Supply chains are being redrawn around friendshoring principles. The EU’s Carbon Border Adjustment Mechanism, coming fully into force in 2026, will reshape valuations in carbon-intensive sectors. Meanwhile, in the Middle East, Chinese capital continues to fill financing gaps with political risk insurance rising in tandem.
Structural shifts: Carve-outs and private equity reinvention
After a year of portfolio reassessment, 2026 will be the moment that those decisions hit the market.
Carve-outs are accelerating, not just as a defensive move, but as a proactive strategy for value creation. Private equity sponsors are also becoming more sophisticated: “Sponsors buy an entire group and then they themselves are carving out separate businesses to sell off. GPs are becoming more confident in remodeling the businesses they buy,” says Jannan Crozier, Baker McKenzie partner, London.
Organizations that thrived in 2025 were the ones that refused to sit out the uncertainty and that theme will continue.
Technology and AI: The new deal frontier
If any sector defies cyclical gravity, it is AI. Investment continues to surge despite talk of inflated valuations and a hype cycle.
“It doesn’t matter if, conceptually, there is the perception of a bubble,” Crozier says. “The companies now driving AI have invested too much to fail. They are fundamental to how we will operate in the future.”
Generative AI is also transforming the deal process itself. Adoption in M&A workflows is expected to jump from 16% today to 80% within three years, transforming diligence to predictive valuation modeling. At the same time, regulators are already considering the long-term power dynamics of AI consolidation, which will add further friction to future megadeals.
The M&A landscape in 2026 is shaped by competing forces: abundant opportunities and strong pipelines alongside heightened regulatory scrutiny, accelerating investment in AI, geopolitical uncertainty, and the most sophisticated buyers the market has ever seen.
However, for those prepared — those already shaping their pipelines, refining their narratives, and embracing structural and technological innovation — the opportunity is immense.
Looking ahead in 2026
Businesses should look to accelerate pipeline execution, anticipate regulatory and geopolitical complexity, and harness AI and the power of narrative.
- Convert 2025 portfolio reviews into transactions before competition heats up. Stress-test your pipeline and be deal-ready even in volatile markets
- Prepare for deeper scrutiny. Build in friendshoring, tariffs, and carbon border mechanisms into valuations from the start.
- Adopt AI across deal workflows as usage accelerates and is projected to reach 80% within three years. Recognize the power of storytelling in securing investor confidence.