Global merger and acquisition (M&A) activity declined sharply in the third quarter of 2026, falling to US$993 billion and marking the first time since mid-2025 that quarterly deals totaled less than US$1 trillion, according to data from LSEG. This represents a 41 percent decrease compared to the previous quarter and the lowest volume of deals since the fourth quarter of 2024.
Among the deals announced in the quarter were several large transactions, including Banca Monte dei Paschi’s US$32 billion bid for Banco BPM and Gold Fields’ US$25.7 billion offer for Northern Star Resources. However, the overall number of megadeals valued over US$10 billion dropped significantly, with only 10 such transactions recorded.
The decline in activity coincides with rising global energy costs contributing to inflationary pressures and pushing expectations for higher interest rate levels. The benchmark 10-year U.S. Treasury yield recently reached 5.34 percent, its highest point in more than two decades, and experienced the largest quarterly increase this century. Elevated yields can make asset valuations more challenging, though some industry experts indicate it is premature to declare a widespread market slowdown.
Despite the third-quarter drop, total global M&A value has increased by 28 percent year-to-date, reaching US$3.9 trillion—the highest level since 2001. The number of deals, however, has decreased by 8 percent, bringing deal counts to levels not seen since 2020.
Industry participants attribute continued corporate interest in acquisitions to the pursuit of scale, access to new markets, and technological advancements. Carsten Woehrn, co-head of M&A for Goldman Sachs in Europe, the Middle East, and Africa, noted ongoing boardroom urgency to execute strategic transactions, with the potential for full-year deal values to surpass the previous 2021 peak.
Investment in the technology sector remains a significant driver of transactions, accounting for approximately one-quarter of global M&A volume this year. Notably, companies specializing in artificial intelligence (AI), such as Anthropic and OpenAI, have attracted tens of billions of dollars from investors in recent months. This aligns with a trend of companies expanding to better navigate the evolving AI landscape.
Regional dynamics vary, with U.S. and European dealmaking experiencing marked declines in the third quarter, while Asia Pacific M&A activity increased by 8 percent from the previous quarter and by 36 percent year-over-year, totaling US$242 billion.
Private equity-backed deals reached record levels this year, marking the strongest start since 1980 by value, although third-quarter activity slowed compared to the same period last year. Cross-border transactions have also gained momentum, rising 32 percent over the prior year. U.S. companies are increasingly exploring acquisitions in Europe, benefiting from a stronger dollar, while foreign investors are looking toward the U.S. for growth opportunities.
Public markets have played a key role in supporting M&A, with technology sector initial public offerings (IPOs) generating fresh capital. SpaceX's June Nasdaq debut, which valued the company at over US$2 trillion, was among the most notable. Following this, SpaceX swiftly acquired AI coding startup Cursor, exemplifying how newly public firms are using elevated valuations to fund strategic acquisitions.
However, some caution has emerged from market participants. Rising inflation, interest rates, and geopolitical uncertainties—including concerns around upcoming U.S. midterm elections—have prompted some investors to adopt a more measured approach, particularly toward AI-related deals. Furthermore, a slowdown in data center developments and higher borrowing costs have delayed certain IPOs, signaling potential challenges for equity markets.
Nevertheless, market watchers remain optimistic about the outlook for 2027. Structural growth drivers such as AI are expected to sustain robust dealmaking activity in the coming year, according to JPMorgan’s global head of M&A, Charlie Bouckaert.