Global mergers and acquisitions (M&A) activity is set to maintain momentum this year, with 80% of M&A executives expecting to sustain or increase deal activity, management consulting firm Bain & Company (Bain & Co) reports.

The firm points out that M&A deal value increased by 40% year-on-year to $4.9-trillion in 2025 – the second-highest deal value on record.

It states that the M&A environment remains favourable, with improving macro conditions and a growing backlog of private equity and venture capital assets ready for exit.

Leaders across industries also recognise that many traditional business models have reached the limits of their historical growth engines, the firm says.

Technology disruption, post-globalisation, and shifting profit pools impacted on businesses in 2025.

This year, M&A will be a critical tool for companies as they shift from reacting to these forces to proactively reshaping strategy and portfolios around them.

Further, technology disruption, including from advancements in AI, robotics and quantum computing, will have profound implications for deal-making this year as well. Almost half of all deals in the technology industry already have an AI angle, which is a trend that will accelerate as the industry’s players pursue assets for AI talent and technology.

Among non-technology firms, deals will flourish among companies seeking to build out technology solutions, Bain & Co says in its 'Global M&A Report 2026', which surveyed 300 M&A executives across Australia, Brazil, Canada, greater China, the Eurozone, India, Japan, the Middle East, the UK and the US.

“The ingredients are in place for another robust year in M&A following last year’s near-record rebound. Companies urgently need to reinvent themselves to get out ahead of the big forces of technology disruption, a post-globalisation economy, and shifting profit pools. M&A will play a pivotal role in this reinvention in 2026,” says Bain & Co global M&A and Divestitures practice executive VP Suzanne Kumar.

Firms across sectors will increasingly turn to M&A, including divestitures and spin-offs, as industry evolution pressures portfolio strategy.

More than half of companies that participated in the survey are prepping assets for sale within the next few years, driven by a desire to gain focus, free up cash and capitalise on higher valuations in today’s market, the report notes.

Additionally, geopolitics and post-globalisation will continue to drive M&A strategy this year and beyond, particularly after tariff shocks in 2025 drove a deeper understanding of how fragmentation will reshape flows of goods, capital, intellectual property and labour.

Companies will make bolder moves to double down on some parts of their global footprint and minimise exposure to less favourable parts. M&A and divestitures will be crucial to rapidly execute that realignment.

However, one significant hurdle for M&A is the high demand for capital. Despite robust deal-making activity in 2025, the proportion of capital allocated to M&A hit a 30-year low.

Recently, companies have increased reinvestment through capital expenditure (capex) and research and development (R&D). As competing demands for capital raise the bar for deals, disciplined reinvention and value creation are essential, says Bain & Co.

Meanwhile, AI is quickly becoming indispensable to M&A, and the survey found that 45% of M&A executives used AI tools in M&A in 2025, which is more than double the prior year.

About one-third of deal-makers are systematically using AI in M&A or are redesigning processes for it. More than half expect AI to significantly impact how deals are done, says Kumar.

Specifically, companies are using AI in five ways to extract more value from M&A, namely for dynamic pipelines, enhanced accuracy in outside-in intelligence, faster path to greater synergies, minimising integration prep work and earlier and deeper stakeholder insights.

“Early adopters are gaining a concrete advantage when it comes to deal-making. Companies are using AI to create value across the deal cycle, including later stages like transaction execution, integration, and learning,” she says.

In terms of M&A strategy in 2026, Bain & Co recommends that M&A be grounded in the new strategic context.

Executives must pressure-test whether M&A pathways and specific deals will help the company better compete in the most attractive markets, build capabilities more quickly or even exit when they no longer are the best owner.

Additionally, as capital is constrained and the bar for M&A rises, companies should take a full potential view in due diligence.

Diligence is no longer just about validating a deal, but also about confirming that M&A is the best use of capital. A rigorous, thesis-led approach to diligence is the best way for infrequent acquirers to bend the experience curve and compete with more seasoned buyers, the report says.

Similarly, companies should refresh their strategic capital allocation because it is critical to maintain a long-term, multiyear view of capital planning with clarity on big strategic investments in timing and size for capex, M&A and R&D.

Deal-makers must regularly refresh that view to stay relevant and clearly articulate the strategic role of M&A in capital allocation to investors, it states.

STANDOUT SECTORS
M&A in banking surged in 2025 to $212-billion in deal value, buoyed by a more favourable regulatory environment, supportive monetary policy and a more acute need for modernisation to support continued growth.

The confluence of these trends has reopened the deal environment to strategic growth plays rather than defensive plays. Deals that combine both scale and scope components are key this year.

In 2025, such banking deals saw an estimated 30% improvement in gains in valuation than deals that were primarily only scale or scope, Bain & Co says.

Oil and gas companies consolidated in record numbers in 2025, aiming to capture scale, cut unit costs and further integrate value chains to get out ahead of everything from declining oil prices to all-time high demand for natural gas.

Deal activity and value creation are increasingly concentrated among a smaller set of players in the industry. Over the past ten years, the top 20 oil and gas acquirers accounted for 53% of deal value.

Further, software companies acquired a record number of AI assets in 2025, with nearly half of tech deals involving an AI component, up from one in four deals in 2024.

AI-related deal value shot up as well, with companies turning to M&A to bolster product capabilities, access talent pools and accelerate innovation.

Revenue synergies have become an increasingly important part of the equation for software companies, the report notes.