Transactional activity in Europe gains momentum heading into 2026

Europe: deal activity rallies after flat start to 2025

M&A value between July and December is highest since 2022

At USD746 billion, European M&A to the beginning of December was 12% higher than the total for the whole of 2024. While deal volumes fell between H1 and H2, activity rose sharply in the post-summer months as dealmakers acclimatized to an increasingly uncertain macro environment.

Deal value was up 23% in H2 to December 1 compared with the first six months of the year on the back of a series of big-ticket strategic transactions. The average European M&A deal in the fourth quarter was more than twice as big as in Q1. Private equity mirrored this trend, with fewer buyouts but a significant increase in deal size, reflecting a disciplined focus on quality assets and operational transformation.

The UK was Europe’s largest M&A market by value to December 1, with USD181.3bn of deals—slightly higher than 2024’s total of USD179.7bn. Deal value also rose in other major EU economies including Italy (up 4.3% on 2024), France (up 4.8%), Germany (up 17.8%), Belgium (up 57%) and Spain (up 63%). The Netherlands shows the highest percentage rise at 171.6% following a series of major public M&A transactions.

Technology was the leading sector by deal count, as buyers targeted digital capabilities and assets (technology, data and/or people) to support their AI transformation. Energy transition and infrastructure transactions have also been prominent.

EU regulatory reforms provide cause for optimism

As far as 2026 is concerned, the European Union’s ongoing regulatory reform program is expected to create momentum for deals. Europe’s sustainability and AI regulatory framework have been eased in a bid to improve competitiveness and innovation, while the European Commission has also launched a public consultation on potential revisions to the guidance around the application of the EU Merger Regulation.

Further developments are expected in March, when Executive Vice-President Teresa Ribera will host an expert summit to discuss challenges with the current competition regime. The conference is designed to ensure the EU’s merger control framework “remains effective and fit for purpose in the context of evolving market realities.”

We expect stabilizing interest rates, large volumes of private equity dry powder, and a focus on technology and ESG-driven assets to drive dealmaking in the first half of 2026. To succeed, buyers will require organizational agility, strategic alignment between boards and management teams, and the ability to navigate ongoing market volatility and regulatory complexity.

The Netherlands: confidence grows following string of big-ticket M&A deals

Significant public takeovers push M&A activity to highest level since 2022

The Netherlands was one of Europe’s most active M&A destinations by value in 2025, with a series of significant transactions signed during the second half of the year. At the start of December, overall dealmaking by value had reached USD60.7bn across 661 deals, with strong activity in consumer, technology, and energy transition opportunities. 

A number of significant deals were executed on accelerated timeframes in the period to September amid a pause in trade tensions between the EU and Washington. Here, due diligence efforts were targeted on key value drivers to shorten the path to completion. 

As confidence grew through H2 and deal pipelines strengthened, more structured processes returned, with an increase in preparations for sell-side auctions and vendor due diligence (VDD) reports. 

In an economy where volatility and uncertainty are constants, we are seeing regular dealmakers better positioned to execute strategic investments. These investors have adapted their M&A strategies around market shifts, for example by favoring joint ventures over acquisitions and using earn-outs to bridge valuation gaps.

The most successful dealmakers in periods of rapid change are those that are M&A ready, with a well-defined rationale for transactions that is supported by their boards and management teams. Those whose key decision-makers understand and buy into M&A strategy are better able to make quick, confident decisions when opportunities arise. 

Germany: decisive moves on defense bolster market certainty

Decisive response to defense challenges among drivers for higher H2 M&A activity

German M&A also rose sharply during the second half of 2025, reaching USD75.4bn between October and December 1—167% up on the aggregate total for H1. Strategic buyers with a clear focus were increasingly prepared to pay large premiums for targets, helping to neutralize potential competition from financial sponsors. 

These transactions were the result of a range of factors, including increased trade with India and constitutional reforms introduced to facilitate higher defense investment.

By 2029, it is expected that Germany will be spending more than EUR150bn annually (3.5% of GDP) on defense. Analysis of procurement plans suggests the majority of these contracts will go to European suppliers—particularly domestic ones—rather than U.S. manufacturers who have historically had strong ties with Berlin.   

Investment to benefit homegrown primes and unicorns

This investment will benefit both homegrown prime contractors such as Rheinmetall as well as unicorns such as Helsing, which makes drones and other AI-enabled weapons systems. The European Commission has also indicated its willingness to take a more lenient approach to merger reviews in the sector, which is set to provide further momentum for transactions. 

Elsewhere, more consolidation is anticipated among Germany’s financial institutions, where the impact of Europe’s regulatory framework on profitability has created an impetus to build scale. We are also seeing growing interest from Indian investors in Germany and Europe more broadly, with inbound M&A by value the highest in five years.

India has been maneuvering to usurp China as a manufacturing hub—and a source of highly skilled human capital—amid heightened tensions between Washington and Beijing. At the same time, Indian demand for European products is on the rise. In October, Indian airline Indigo agreed to purchase 30 planes from Airbus in response to higher demand for domestic flights, while Mercedes is benefiting from greater spending power among India’s increasingly affluent middle class. 

UK: currency weakness and industrial policy point to increased deal activity

UK: fewer, bigger deals in H2 2025

M&A rises by value amid slight fall in deal volume in second half of year