Despite ongoing market volatility, half of dealmakers anticipate an increase in European M&A activity over the next twelve months, according to CMS’s 2026 European M&A Outlook, published in collaboration with Mergermarket. While this marks a slight decline from last year, the overall sentiment remains cautiously optimistic.
The report captures the perspectives of 330 corporates and private equity firms across Europe, the Americas and Asia-Pacific, offering a detailed view of expectations for the European M&A landscape in the year ahead.
Deal value climbs despite volume decline
The first half of 2025 saw a mixed performance in European M&A. Despite deal volume falling by 15% to 7,888 transactions, total deal value reached €474 billion, up 5% year-on-year. This divergence suggests that investors remain willing to deploy capital for high-quality assets, even in a challenging environment.
Pieter van Duijvenvoorde, Partner and Head of the Corporate/M&A Group at CMS in the Netherlands, said: "Despite the global challenges, dealmakers remain cautiously optimistic about the European M&A market and seem to adapt to the continuous uncertainty. The impact of the trade wars is weighing heavily on dealmakers' minds, but dealmakers consider financing difficulties and valuation gaps the primary obstacles to M&A. European deal activity is expected to increase, in particular in the TMT, industrials & chemicals and energy sectors, where the Benelux is expected to be the top spot for M&A for the next twelve months."
Key drivers and barriers
Non-core divestments from large corporates (42%) and distress-driven sales (38%) are expected to be the leading drivers of sell-side activity. On the buy-side, undervalued targets and turnaround opportunities (both 31%) are seen as key motivators, alongside digitalisation (30%) and supply-chain security (27%).
However, financing remains a major concern. Over a third of respondents (34%) cite difficulties in securing capital as a top obstacle, while 30% point to valuation gaps between buyers and sellers. Trade-related disruptions have also intensified, with 26% identifying trade wars as a significant barrier—up from just 10% last year.
Cash reserves are anticipated to be the most accessible source of funding (51%), followed by debt capital markets (38%). Additionally, 67% of dealmakers are exploring alternative deal structures such as convertible instruments and earnouts to navigate financing challenges.
Outlook for 2026
Despite geopolitical tensions—particularly around EU-US trade policy—dealmakers remain focused on strategic opportunities. Increased infrastructure and defence spending, along with regulatory efforts to boost competitiveness, are expected to support M&A momentum.
