Bridging the gap: CMS European M&A Outlook 2027

According to CMS’s 2027 European M&A Outlook, almost two-thirds of dealmakers expect the level of European M&A activity to increase over the next 12 months, in spite of geopolitical turmoil. The Outlook was published today in association with financial data firm Mergermarket.

Despite the outbreak of war in Iran and the attendant Hormuz crisis – precipitating higher energy prices and renewed inflation – M&A in Europe enjoyed a busy H1. Transaction volume was down just 5% compared to the same period in 2025, but the real story can be found at the top of the deal market – aggregate value climbed by a towering 54% year-on-year, reaching EUR 723bn. Evidently, megadeals were back in force.

Louise Wallace, Head of the CMS Corporate/M&A Group, said: “The message for 2027 is that uncertainty is no longer putting dealmaking on hold. Companies and investors are increasingly treating volatility as part of the environment they have to navigate, rather than a reason to postpone strategic decisions.”

Digitalisation and rising valuations

According to respondents, digitalisation will be the principle buy-side driver of M&A in Europe over the next 12 months, with 33% citing this in their top two and 18% ranking this first, a result consistent with rising digital investment and artificial intelligence outlays. Turnaround opportunities come in second place overall (30%) while consolidation is third (27%).

In a reversal from our last study, when capital raising for expansion in faster growing areas was expected to be the least important sell-side M&A driver, this factor comes out as the most significant this year, cited by 49% of respondents overall.

Financing pains

Over half of respondents (58%) believe financing conditions in Europe will worsen over the next 12 months, reflecting interest rate pressures and tightening credit standards in the region. However, this figure does nevertheless represent a marked improvement from our previous survey, when more than three-quarters of dealmakers (78%) expected financing conditions to deteriorate.

Regarding key sources of capital, half of respondents believe private equity will be the most available financing source over the coming year, given the still-enormous stores of dry powder available to sponsors and the pressure on private equity firms to put that capital to work.

Southern pivot

Though respondents continue to highlight Benelux and the UK & Ireland as the two regions that will see the highest M&A growth over the next 12 months, Southern European markets have recently climbed into dealmakers’ estimations. Nearly a third (31%) of respondents rank Iberia in their top two for accelerating M&A, while 22% say the same of Italy, which last year ranked second bottom. With GDP growth rates in Southern Europe handily exceeding the euro area average, the region is affirming its reputation as a magnet for international M&A.

US influx

Reflecting rising appetite among US buyers for European assets – where targets generally carry less steep valuations than their equivalents in the US might – most respondents (88%) say they have seen more US buyers active in the region over the past 12 months. Respondents expect this cross-Atlantic trend to continue: 95% anticipate seeing more interest from US buyers in European assets over the coming year.

Outlook for 2027

Though megadeals took all the headlines in H1 2026, European M&A over the coming 12 months appears more likely to skew towards value investments. Buyers are on the lookout for turnaround opportunities and are emphasising creative solutions to close valuation gaps. Sellers, meanwhile, are focusing on core business resilience, including considering divestments of peripheral units and raising capital to reinvest in higher-growth segments.

Dr Malte Bruhns, Head of the CMS Corporate/M&A Group, added: “The combination of strong international interest and capital waiting to be deployed could make competition for attractive European assets noticeably more intense in 2027. That may also help bring buyers and sellers closer together where valuation expectations have so far held transactions back.”

Methodology

In Q2 2026, Mergermarket surveyed senior executives from 182 corporates and 68 private equity firms based in Europe, the USA and APAC about their expectations for the European M&A market in the year ahead. Among the 250 executives interviewed, 70% are headquartered in Europe, while the remaining 30% are split equally between the USA and APAC. 91% of all respondents have been involved in an M&A transaction in Europe over the past two years and 84% plan to undertake an M&A transaction in Europe in the coming year.

All responses are anonymous and results are presented in aggregate.

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