The global M&A market has demonstrated strong resilience amid geopolitical turmoil and market volatility.
According to Reuters, data from the London Stock Exchange Group (LSEG) shows that global M&A deal value exceeded $1.2 trillion in the first quarter of 2026, a year-on-year increase of 26%, setting a new record for the same period in history. Despite a 17% year-on-year decline in the number of deals, the average size per transaction increased significantly, with AI-related deals and cross-border acquisitions emerging as key drivers.
Unlike last year's M&A stagnation triggered by Trump’s 'Emancipation Day' tariff policies, the outbreak of conflict in the Middle East at the end of February this year had a limited impact on corporate M&A appetite. Sam Kim, Global Head of M&A at Deutsche Bank, stated, 'This time, people are no longer waiting for conditions to improve but instead recognize volatility as a constant and proceed with transactions within this framework.' George Holst, Global Head of Advisory at BNP Paribas, revealed that the bank’s M&A pipeline has grown by over 20% in both volume and value compared to last year.
AI Transactions Dominate Large-Scale M&A; Equity Stake Trend Becomes Prominent
Large-scale transactions have dominated the market landscape this quarter.
LSEG data indicates that there were 22 transactions exceeding $10 billion in the first quarter, marking a single-quarter historical record. Among the six largest deals, four were directly related to AI. OpenAI’s $110 billion funding round accounted for three of these, while Anthropic’s $30 billion financing ranked fourth.
Notably, all four of these transactions involved equity stakes rather than traditional M&A. According to LSEG data, such equity stake deals accounted for 29% of total transaction volume this quarter, a trend that is accelerating rapidly.
Meanwhile, software companies perceived by the market as ‘losers’ in the AI competition or vulnerable to disruption have seen a noticeable decline in M&A activity. Investors have continued to sell off related stocks, depressing valuations of these targets, according to M&A traders.
Market Volatility Fails to Halt Deals; Companies Shift Toward More Prudent Strategies
The conflict in the Middle East triggered unprecedented oil supply shocks, drastic fluctuations in oil prices, and significant swings in corporate valuations. However, corporate boards responded by raising screening standards rather than abandoning M&A altogether.
Philipp Beck, Head of EMEA M&A at UBS Investment Bank, stated, "The driving force behind M&A lies in strategic logic, which is more fundamental than short-term market fluctuations." He added that if volatility persists for months rather than weeks, thereby disrupting expectations for inflation, interest rates, and growth, "then market dynamics may shift, but we are not there yet."
John Collins, Global Co-Head of M&A at Morgan Stanley, stated that corporate clients continue to view M&A as a key driver of growth strategy. "If volatility eases, we may see activity similar to the busy deal-making environment of the second half of last year."
Surge in Cross-Border M&A Activity, with the US Emerging as the Largest Target Market
Cross-border M&A has emerged as another central theme this quarter. Data from LSEG shows that the scale of cross-border M&A in the first quarter increased by 47% year-over-year, reaching $454.7 billion, marking the highest level for the same period since 2002.
The United States is the most favored target market for cross-border deals, accounting for 52.4% of total cross-border transaction value, followed by the UK at 11.5%. Notable transactions include McCormick, the US-based condiments giant, acquiring Unilever's UK food business, creating a global food giant with a combined market value of $65 billion; and French Engie announcing a $21.3 billion acquisition of a UK electricity network company last month.
Andrew Woeber, Global Head of M&A at Barclays, noted, "Cross-border corporate activity is a defining trend we are witnessing, with CEOs and boards no longer waiting for the perfect timing." Holst of BNP Paribas also pointed out that for European companies facing pressure from slowing domestic growth, completing deals in the US is highly attractive due to stronger growth, higher corporate valuations, and the availability of local production capacity offering tariff protection.
Editor/Liam