WTW forecasts stronger year ahead for global M&A

Global mergers and acquisitions (M&A) outperformed companies not involved in dealmaking during the first nine months of 2025, according to new WTW research produced with the M&A Research Centre at Bayes Business School.

The firm said the market is on track for its best year since the post-pandemic boom, creating a stronger platform for 2026.

Jana Mercereau (pictured), head of Europe M&A consulting at WTW, pointed to pent-up demand, stock-market highs and steady interest rates as drivers behind the recent surge.

“After a turbulent start to 2025 marked by aggressive tariff policies and geopolitical tensions, the recent M&A surge suggests a recalibration in the market,” she said.

“Buyers have learned to normalise and move through uncertainty, supported by lower financing costs and increased confidence in future growth prospects,” she continued.

Mercereau noted that tariff volatility, geopolitical rifts and regulatory hurdles would persist into next year, making early integration planning “one of the toughest tests for buyers looking to lock in gains and drive long-term, sustainable growth,” she added.

Big deals return

Eight megadeals, valued over $10bn, closed in the third quarter of 2025, the highest peak since the final three months of 2018, Mercereau emphasised.

“With a similar rise in large deals (valued over $1bn), this uptick signals growing optimism in the market,” she said.

She said the trend would carry into next year as companies de-conglomerate to “buy and build” for portfolio optimisation, rather than pursue higher-risk, one-off transformative acquisitions.

“With a focus on core strengths, this back-to-basics approach will gain traction, particularly in mid-market deals, as buyers make smaller, complementary acquisitions to achieve rapid expansion, synergies and integrate critical technologies,” she said.

Mercereau said energy, defence, biopharma and technology assets would continue to attract healthy interest in 2026.

“While cost of living pressures have taken the shine off consumer-focused businesses, an improved pipeline of deals is anticipated as the tariff fog clears in the coming year,” she added.

North America leads the rebound

She said Europe and APAC both improved through 2025, but “the most dramatic turnaround in deal performance was in North America”.

“Following ten consecutive negative quarters, North American buyers achieved significantly improved results, with momentum expected to extend into next year,” she said.

“Despite ongoing policy uncertainty and market volatility, robust GDP growth coupled with the Federal Reserve’s signal for additional rate cuts are easing financing conditions and driving increased strategic activity into 2026.”

Continuation funds gain ground

Private equity-backed deals are also expected to rise.

“Thanks to more than $2trn in undeployed capital, better exit opportunities and less restrictive debt markets,” she said.

She added that the use of continuation funds “will accelerate, moving from niche to mainstream, allowing PE firms to transfer one or more portfolio assets from existing, maturing funds into new vehicles”.

“This will enable existing investors to cash out and fresh capital to buy in,” she observed.

AI reshapes dealmaking

“AI has rapidly emerged as a game changer in the fast-paced M&A world,” she said.

“Corporates are applying AI to accelerate and enhance dealmaking — from scouting high-potential targets and conducting deeper due diligence to streamlining integration.”

But she warned that innovative technologies “introduce new complexities and risks, relating to adoption, governance and reliance on human expertise, that must be carefully managed”.

Mercereau said: “The M&A outlook is optimistic, with forecasts indicating increased activity driven by larger deals focused on scale, innovation and market expansion.

“While volatility remains a persistent challenge and CEOs should be prepared to plan longer timelines, history shows that periods of turbulence can offer the greatest potential to create value,” she added.