Mergers and acquisitions are on track to have one of their best performing years since the boom that followed the pandemic. WTW, formerly Willis Towers Watson, says the booming stock market and pent-up demand is creating a great environment for M&A as the year comes to a close.
WTW has also released its outlook for 2026. David Dean, Managing Director, M&A Consulting at WTW, says, “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.”
The five trends for the new year, according to Dean, include:
1. Finding the upside of uncertainty
“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. Buyers have learned to normalize and move through uncertainty, supported by lower financing costs and increased confidence in future growth prospects.
“At the same time, tariff volatility and geopolitical rifts will persist in the months ahead. With more companies going for scale, early integration planning during the due diligence phase may prove one of the toughest tests for buyers looking to lock in gains and drive long-term, sustainable growth.”
2. Return of big deals sparks optimism
“Next year, large-scale M&A will be underpinned by a drive to de-conglomerate in order to ‘buy and build’ in the pursuit of portfolio optimization - rather than higher risk, one-off transformative deals. 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 Bintegrate critical technologies. Energy, defense, biopharma and technology assets will continue to attract healthy interest in 2026.”
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3. US M&A market set for major rebound
“Following ten consecutive negative quarters, North American buyers achieved significantly improved results, with momentum expected to extend into next year. 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.”
4. Private equity: Rise of continuation funds
“Private equity-backed deals are projected to rise in 2026, thanks to more than $2 trillion in undeployed capital, better exit opportunities and less restrictive debt markets. 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.”
5. AI boom brings fresh risks to dealmaking
“AI has rapidly emerged as a game changer in the fast-paced M&A world. Corporates are applying AI to accelerate and enhance dealmaking - from scouting high-potential targets and conducting deeper due diligence to streamlining integration. Innovative technologies also introduce new complexities and risks, relating to adoption, governance and reliance on human expertise, that must be carefully managed. Addressing these challenges will be key to unlocking the full potential of AI in M&A.”
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