M&A is back with the third and fourth quarters of 2025 seeing an increase in deal value of 43 per cent to reach USD4.7 trillion compared to USD3.3 trillion for the previous year.
A 2026 report from McKinsey – M&A trends: Navigating a rapidly rebounding market – found the more benign than anticipated fallout from US trade policies created a confident outlook from dealmakers, which translated into deals for 2025 outstripping the 10-year average of 20 USD3.9 trillion.
Jake Henry, author of the report and Senior Partner at McKinsey, says: “In one of the clearest signs of momentum, global M&A activity landed at 4.2 per cent of total market value for all of 2025, up from 3.3 per cent a year earlier and 3.5 per cent in 2023. While still shy of the 10-year average of 5.3 percent, the improvement is significant and suggests room for growth if historical patterns hold.”
One of the most striking patterns in 2025 was the expansive presence of large deals. The number of deals clearing the USD10 billion mark swelled to 60; the most since the M&A peak in 2021 after the COVID-19 pandemic.
The value of large trades more than doubled in 2025 from a year earlier, rising 112 per cent to USD1.3 trillion—and accounting for 28 per cent of deal value, up from 19 per cent. Meanwhile, midsize deals (value of USD1 billion to USD10 billion), which accounted for 45 per cent of deal value, also grew a robust 47 per cent.
In this most recent period, 10 deals exceeded USD30 billion, compared with four in 2024, as well as one of the largest transactions ever recorded: Union Pacific’s agreement to buy Norfolk Southern for USD89.5 billion to create the first transcontinental railroad in the United States.
Henry says: “Several factors are propelling deal sizes, including higher tech valuations, larger consolidation deals, and the demands of entering new geographies at scale. Many senior leaders, even at large enterprises, feel compelled to pursue consolidation to shore up competitive positions and find cost savings in low-growth marketplaces. Indeed, we found that more than half of deals worth more than USD4 billion in 2025 could be categorised as consolidations.”
The artificial intelligence boom is also driving increased M&A activity.
McKinsey reports that tech-oriented businesses are increasingly accounting for a larger portion of deal value. Eighteen fast-growing and highly dynamic industries—so-called arenas that combine business model or technological step changes, escalatory investments, and large or growing addressable markets—could reshape the global economy by 2040, growing to 16 per cent of GDP, up from about 4 per cent in 2022.
Henry says: “Many dealmakers are pivoting toward a dozen of these fast-growing arena industries, which now account for 40 per cent of deal value, up from 7 per cent 20 years ago. They have an average ratio of enterprise value to EBITDA: 27.1-fold, versus 16.5-fold for established companies.”
