Global M&A Outlook 2026 – trends for private equity and principal investors

Global private capital dealmaking has shifted towards fewer but materially larger transactions, reflecting sponsors’ renewed emphasis on conviction, control and clearly articulated value-creation pathways in an environment that remains volatile but increasingly navigable. In 2025, total announced global M&A value was estimated at approximately €3.11 trillion, with an overall deal volume of approximately 47,827, underscoring the concentration of value in larger transactions even as activity remains below 2021’s highs. This dynamism is continuing into early 2026, alongside greater discipline around valuation, due diligence depth and holding-period assumptions. In private equity specifically, aggregate transaction value rose to almost €1.7 trillion in 2025 from roughly €1.4 trillion in 2024, even as the deal count declined to approximately 34,300 from around 36,500, with a relatively small cohort of megadeals driving a disproportionate share of value. Take-privates and consortia have been central to this pattern, as sponsors seek control and execution certainty for complex transformations.

Artificial intelligence has evolved from a thematic investment consideration into a core execution lens. It is shaping both where capital is deployed – particularly across data centres, semiconductors, networks, and power infrastructure – and how investment decisions are made throughout the ownership life cycle. Global Technology, Media & Telecommunications (TMT) continued to anchor value in 2025 with approximately €850 billion, with Industrials & Services and Consumer Markets contributing around €402 billion and €464 billion respectively, highlighting the importance of digital infrastructure and software alongside cyclicals in sustaining deal value. Large-scale AI infrastructure partnerships expanded significantly in 2024-2025, reflecting the scale and capital intensity of the required investments; estimates indicate that €4-7 trillion of cumulative capex may be required by 2030 across data centres, chips, networks and power. An illustrative example is the AI Infrastructure Partnership, launched in 2024 and expanded through 2025, which announced a US$34‑billion acquisition of Aligned Data Centers and catalysed additional sovereign-sponsor joint ventures focused on AI infrastructure. At the same time, leading sponsors report that 30–40% of investment committee discussion now focuses on AI-driven productivity upsides within portfolios and disruption risk to existing business models, with some firms piloting virtual investment committee agents to systematise due diligence.

Private credit has become a structural component of buyout financing. Global private credit assets under management reached approximately €2 trillion by the end of 2025, and private lenders financed about 80% of global leveraged buyouts in 2024-2025, reflecting sponsors’ preference for bilateral execution, certainty of funds and flexible structuring. Although syndicated markets are normalising and banks are gradually regaining their share in selected segments, competition is intensifying: regulators, especially in the US, have eased certain constraints and banks’ lower funding costs are enabling thinner spreads and fewer covenants in some situations, pressuring private credit margins and pushing some lenders out of larger transactions. Even so, partnership models between banks and private credit funds are proliferating, combining origination reach with hold capital and specialised structuring.

Exit options remain a central constraint. The global inventory of PE-backed companies rose to between 31,800 and 32,500 by the end of 2025, up from about 29,400 a year earlier, with a growing share held beyond target durations. In response, secondary solutions – sponsor-to-sponsor sales and GP-led continuation vehicles – have scaled materially, with market value rising from around €22 billion in 2019 to around €64 billion in 2024 and around €40 billion in H1 2025, with full-year 2025 expected to be materially higher. Public markets are only selectively reopening, notwithstanding large reference transactions such as the €5.4 billion IPO of Medline in 2025; as a result, secondaries are likely to remain the dominant exit route in 2026, alongside selective strategic sales.

Germany: inbound PE and non-domestic buyers

Across the broader German M&A market, total deal volume for 2025 is estimated at 1,654 transactions, broadly in line with 2024 as selectivity and price discipline remained defining characteristics. Within this stable baseline, technology, Industrial Manufacturing and Energy continued to attract the majority of inbound capital.

Inbound M&A activity in Germany involving foreign investors remained stable by volume in 2025 and grew materially by value. ECB rate cuts, reduced policy uncertainty following the elections and more rational pricing dynamics supported a renewed flow of large-cap transactions. For the first time, the share of inbound deals made by private equity surpassed that of strategic buyers, with PE accounting for 51.8% of inbound transactions year-to-date as of mid-November 2025.

The recovery in deal value was driven in large part by the return of megadeals. Of the 23 inbound German megadeals announced year-to-date as of mid-November 2025, 13 involved private equity sponsors, representing nearly 57% of megadeal volume and €45.8 billion of combined value. By comparison, during the same period in 2024, PE investors participated in 11 of 16 megadeals (approximately 69%), with an aggregate value of €26.6 billion.

Sector dynamics shaping 2026

Technology remains the cornerstone of inbound private equity activity in Germany, accounting for 36% of PE inbound transactions year-to-date as of mid-November 2025. While this represents a modest decline from 38% in 2024, it reflects a deliberate rebalancing as investors have been complementing software and digital infrastructure exposure with increased allocations to industrial assets. Industrial Manufacturing recorded the largest relative gain among PE investors, rising to 22% of inbound PE deals, supported by Germany’s strengths in engineered products, automation and supply chain-enabling technologies.

Strategic acquirers continued to concentrate most heavily on Industrial Manufacturing, which accounted for 37% of strategic inbound transactions. The strongest year-on-year growth among strategics occurred in Retail & Consumer, up six percentage points, as corporates pursued portfolio optimisation and selected consolidation opportunities.

Energy transition topics – including power generation, storage, grid modernisation and energy efficiency – remained prominent across inbound M&A. These trends are increasingly intersecting with AI-driven demand for power and data centre capacity, attracting diversified capital structures spanning infrastructure funds, private equity sponsors and sovereign co-investors. 

Financing and the role of private credit

Private equity sponsors active in Germany have benefited directly from the global expansion of private credit, which provided speed and structural flexibility for buyouts and complex carve-outs during periods of unsteady syndicated loan market conditions in 2024–2025. Even as banks regain competitiveness in parts of the financing landscape, private credit continues to offer a differentiated proposition in German sale processes – particularly for larger, cross-border or execution-critical transactions.

Partnership models between banks and private credit providers are also becoming more prevalent, combining bank origination capabilities with the flexibility of hold capital. These structures may be especially attractive in German situations requiring certainty of funds, bespoke covenant packages and tailored capital solutions.

Exits, secondaries and holding periods

With IPO markets only partially reopened and trade buyers remaining selective, secondary market solutions are expected to remain central to exit planning in Germany throughout 2026. GP-led continuation vehicles and sponsor-to-sponsor transactions continue to provide liquidity, extend value-creation horizons for high-quality assets, and support distribution to limited partners – an important enabler of fundraising momentum for established managers.

As a result, German sale processes are increasingly being characterised by dual-track planning, with secondary options pre-packaged alongside trade sale and IPO routes to protect execution certainty, timelines and valuation outcomes.

Fundraising, deployment pacing and industry structure

Fundraising remains bifurcated. While the largest GPs continue to close substantial flagship vehicles, aggregate global PE fundraising declined by about 3.8% to approximately €594 billion in 2025, the lowest level in more than five years, as distributions slowed and LPs concentrated commitments with managers perceived as top-quartile. This concentration is accelerating consolidation across the industry and is likely to reinforce the trend towards fewer, larger deals as capital pools seek efficiency through scale. Against this backdrop, deployment pacing has normalised from its 2021 peak, with managers prioritising conviction assets, deeper due diligence and clearer value-creation plans, often via take-privates, carve-outs and complex consortia.

Germany by numbers

• Total deals (all investors): approx. 1,654 in 2025 broadly stable year-on-year.
• Total disclosed deal value (all investors): approx. €80.6 billion in 2025 (estimated).
• Sector deal value mix: Consumer Markets approx. €6.7 billion; Energy, Utilities & Resources approx. €28.9 billion; Financial Services approx. €6.9 billion; Health Industries approx. €14.5 billion; Industrials & Services approx. €11.2 billion; Technology, Media & Telecommunications approx. €12.4 billion.
• Inbound deals (foreign investors): approx. 1,233 for 2025 (estimated), with private equity representing 51.8% of deal count year-to-date as of mid-November.
• Inbound PE megadeals: 13 of 23 year-to-date as of mid-November 2025, representing approximately 57% of megadeal volume and €45.8 billion in combined value.
• Germany’s share of regional activity (context): Germany’s approx. 1,654 deals are expected to represent roughly 9-10% of EMEA volume in 2025 (EMEA approx. 17,484), while their approx. €84 billion total value approximates the low-teens share of EMEA value (EMEA approx. €629 billion) given the conversion noted above.

How Germany compares to EMEA and the world in 2025

Notably, Germany’s 2025 sector pattern differs from the regional and global mixes: local value is skewed towards Energy & Utilities (helped by selected large energy transition and infrastructure transactions), whereas EMEA’s largest value pool was Financial Services and TMT remained the global anchor of aggregate value. This divergence aligns with sponsors’ global tilt towards larger, higher-conviction transactions and take-privates; in Germany, meanwhile, inbound PE investors have simultaneously rebalanced towards industrials alongside technology to capture tailwinds for engineered products and automation.

Summary and outlook for 2026–2027

Dealmaking conditions are improving, but remain selective. For private equity and principal investors, three factors look set to define the next phase.

1. AI will continue to exert influence both as a strategic imperative and a capital-intensive infrastructure opportunity, drawing in long-duration capital and cross-sector consortia.
2. Financing will become more competitive as banks reclaim their share in parts of corporate lending, even as private credit remains core to execution certainty; hybrid structures and partnerships are likely to proliferate.
3. Exits will rely heavily on secondary pathways while IPOs are open only to a limited extent; managers with pre-packaged dual-track processes should be best placed to protect value and timelines.

Against this backdrop, we expect conviction-led deployment into larger assets – across German industrial manufacturing, technology and energy transition platforms in particular – supported by stable macro conditions and more options across financing and exit routes.