European M&A maintains momentum amid broader market uncertainty

European M&A by value in the first half of 2026 defied geopolitical headwinds to reach USD661.5 billion, 85% of 2025’s full-year figure and the highest half-year total since H2 2021. 

Yet beneath this headline strength, European deal volumes fell 17.8% compared to the previous half-year figure, the sharpest drop for several years.  

What we are seeing across key EU jurisdictions is an M&A market where strategic urgency is overcoming market headwinds. The conflict in the Middle East made converting intent into completed transactions difficult and served as a drag on pricing and timelines.  

The EU defense supply chain is attracting significant interest from investors, although deal volumes for now remain relatively low. Despite the sector’s prominence in a more contested geopolitical arena, investments can be challenging for those unfamiliar with its unique dynamics and heavy government scrutiny (for more on the nuances of defense investments, read our report Resilient returns: investing in defense. Demand for renewable power and electric vehicles are also gaining momentum in response to the impact of rising conflict on Europe’s energy supply chains. 

In parallel the regulatory environment in the EU is becoming more deal-friendly, at least for domestic investors. The European Commission’s review of its merger guidelines is intended to make consolidation easier as a way to strengthen European supply chains, including in defense, and boost competitiveness. Meanwhile, the Commission has also intensified its enforcement of the Foreign Subsidies Regulation, which aims to constrain foreign state-backed acquisitions. 

Germany: postponed deals move forward while automative distress attracts investor attention

German M&A by value in the period to June 11 stood at USD111bn, the highest half-year total ever. With that said, deal volumes were down 10% versus the previous six-month period, mirroring the broader European trend.

Germany was the most active EU jurisdiction for inbound M&A in the year to mid-June (and the third-most targeted market globally) recording 431 inbound deals with a combined value of USD98.3bn.

Overall, market activity remains robust against a backdrop of persistent volatility, although much of the deal flow through Q2 2026 consisted of transactions postponed over recent years. Boards across sectors are under public pressure to right-size their businesses via divestments of subsidiaries and non-core assets, and are also seeking scale as a hedge against wider economic volatility. 

Automotive sector provides attractive targets for foreign acquirors

From a sector perspective, the German automotive industry’s distress is generating a wave of corporate activity: Volkswagen selling parts of its business, Porsche closing three subsidiaries and Chinese car-makers considering acquisitions of EU manufacturing facilities to produce within the EU rather than export from their home market. 

While the current German government remains no more open to Chinese investment than its predecessors, automotive may prove the exception by necessity—the largest Chinese EV makers are among the only realistic buyers for facilities that employ thousands.

The Netherlands: corporates act decisively in pursuit of strategic acquisitions

Overall activity in the Netherlands was down sharply in H1 2026 compared to H2 2025 (USD11.2bn, a 78% fall on the previous period).  

Within that figure, much of the activity involved inbound investment (USD10.3bn invested across more than 200 transactions), making the Netherlands the sixth-most active European jurisdiction for inbound M&A by value.  

Public M&A processes continued despite the Iran war, though that activity did not convert into a large number of completed deals. Much of this resilience reflects the nature of the transactions, which were typically one-on-one situations involving strategic acquirors rather than sponsor-driven public to private deals. 

Indeed, a sharper corporate/private equity divide opened during the conflict in the Middle East, with corporates remaining active while PE dealmaking declined. This reflects the desire for scale and strategic focus outlined above, yet while many corporates can see the benefits of strategic combination and integration, agreement on terms is not always straightforward. Despite this, CEOs in the Netherlands continue to make bold moves, having grown accustomed to generalized market instabilities. 

Amsterdam’s IPO markets had a strong start to the year only for activity to tail off. However, boards have carried on with their IPO preparations; unless the cessation of hostilities in the Middle East is fragile, we expect activity to rise in H2. 

Belgium: private equity investment committees proceed with caution despite shortage of opportunities

Belgian M&A by value reached USD2.4bn in the year to June 11, the lowest half-year total since the turn of the decade, with 158 deals recorded in the period. Of those, 83 were inbound acquisitions with a combined value of USD1.8bn.  

Activity among private capital investors at the upper end of the market reveals a notable disconnect: an asset shortage that would normally lift prices coexisting with cautious valuations driven by prudent investment committees. 

Across the first half of the year we saw bidders unable to bridge these gaps withdrawing from processes, including between the non-binding and binding offer stage. Sellers are having to readjust to this dynamic, though it remains to be seen how far they will move versus turning to alternatives such as continuation vehicles. Elsewhere, mid-market activity is strong, including in software and technology, propelled by unprecedented levels of PE dry powder. 

As in other markets, deal processes were delayed rather than terminated during the U.S./Iran conflict, with bidders keen to wait for current trading results to assess how market pressures are affecting financial performance.