After three years of turbulence, is the global M&A landscape poised to significantly improve in 2026?

After navigating the choppy waters of 2023 and 2024 and the gradual recovery of 2025, global commentators are predicting a year that will be characterised by renewed optimism tempered with strategic caution. Morgan Stanley forecasts global M&A activity to surge by 20% in 2026, with completed transactions expected to increase by 24% as financial sponsors return to the market with renewed vigour [1].

The pundits think that this anticipated uplift signals not just a return to form, but a fundamental reshaping of how deals are conceived, structured and executed in an increasingly complex global environment.

We agree!

In New Zealand, we think that improving macroeconomic conditions, bottoming interest rates (for now), and a weakened dollar combined with pro-investment regulatory settings, are making the market increasingly attractive to offshore investors. But it’s not all positive. Ongoing geopolitical uncertainty and lagging consumer confidence may temper this optimism and some of the potential activity will depend on the outcome of this year’s election.

The global momentum presents both opportunities and challenges for New Zealand. Our market has weathered its own storms over the past two years. The ‘bumpiness and grumpiness’ continued well into 2025. However, things started to improve as Christmas approached.

Will 2026 be the year when New Zealand’s M&A market fully emerges from this period of recalibration and joins the global upswing?

The global context

In December, Bloomberg reported that global deal volumes for 2025 were on track for a near record-breaking USD5 trillion, driven upwards by several US‑based mega deals [2].

This surge has been driven by improved financing conditions, corporate confidence in strategic growth, and the deployment of substantial funds that have accumulated in recent years.

Much of the increased volume is a result of the 67 megadeals (>USD10 billion) that completed in 2025 (up from 35 in 2024) – signalling that major corporates are once again willing to pursue transformative transactions. Yet alongside these headline-grabbing deals, there is a growing emphasis on “buy and build” strategies, where companies make smaller, complementary acquisitions to achieve rapid expansion and integrate critical technologies.

The New Zealand experience

Last year was a tough year for dealmakers, albeit with some notable highlights (such as the Fonterra deal). As in previous years, deals remained hard, with lengthened timetables, tense negotiations and lots of pauses. The disconnect between buyer and seller expectations on terms and value seemed present for much of the year. With so many assets in private (and patient) hands, sellers were reluctant to come to market as their otherwise solid businesses traded down due to factors beyond their control.

But buyers and sellers demonstrated resilience and adaptability by using considered structures, alternative financing, and sharper risk allocation strategies.

Corporate carve-outs were a hallmark of the year, with portfolio simplification and reinvestment in core operations driving activity. Minority investments and joint ventures featured prominently, offering flexibility for investors and corporates to enable growth without full-scale acquisitions and allowing sellers to realise value while continuing to participate in growing markets.

Competitive auction processes gave way to bilateral negotiations, reflecting a market prioritising certainty and confidentiality over speed. This shift away from the competitive tension of auctions, together with extended and more cautious due diligence, contributed to the blowing out of deal timeframes with many deals taking months (or even years). With longer timelines comes deal fatigue, as parties lose momentum, priorities shift, and external factors intervene, resulting in more deals falling over late in the process.

But the increase in global activity is beginning to energise the domestic market. Many firms were busy in the lead up to Christmas, as optimism increased and buyers galvanised. The quicker cadence of previous years returned to some deals – we signed and closed Grant Thornton Advisers’ acquisition of Grant Thornton New Zealand in three months.

With renewed global optimism, we think that New Zealand’s position remains attractive. The country’s world-class technology, healthcare and financial services sectors continue to lure international investors – TPG’s recently announced acquisition of Tamaki Health is testament to that.

As we reported last year, the swing from a seller-friendly environment to a buyer-friendly one was sudden and ferocious, but as the year wore on, common ground started to emerge. As we enter 2026, this recalibration should be largely complete, creating a more balanced negotiating environment and bringing more quality assets to market.

Private equity coming out of the gates?

Our private equity market has demonstrated notable resilience despite a challenging macroeconomic backdrop and scarcity of quality investment opportunities.

Mid‑market deals (i.e. between NZD50 million and NZD200 million) are the backbone of New Zealand’s private equity market. We’ve seen a significant drop in the volume of these deals in the last 18 months – as owners have battened down the hatches to wait for improved earnings and an end to the downturn.

While domestically owned PE firms have considerable uncommitted capital, they have been cautious around deploying it during these challenging economic times. Trade buyers have taken the lead in many processes, offering synergies and strategic advantages, with PE often taking a back seat unless trade interest fails to materialise.

Many funds have focused on improving performance of existing portfolio investments, completing bolt‑on acquisitions or disposals of non‑core assets rather than pursuing new platform acquisitions. Activity has been heavily sector‑focused, with retail and construction sectors very quiet or distressed, while healthcare, financial services, wealth management, education and technology have remained attractive.

With macroeconomic indicators showing green shoots for the New Zealand economy, interest rates set to stay low for now, and a Government focused on business growth and easing foreign investment restrictions, we expect PE transactions to return with a vengeance in 2026.

On the flip side, it has remained hard for some funds to exit their existing investments – for the same reasons that new opportunities have been scarce. The international trend of continuity funds may come to New Zealand as a mechanism for funds to transfer portfolio investments to new vehicles while offering underlying fund investors the opportunity to exit.

Read more about private equity trends.

The Americans are here!

We’ve seen a significant increase in the volume of US investors – both corporate and PE – arriving on our shores, drawn by our stable regulatory environment, high‑quality assets, and proximity to Asia‑Pacific regional growth.

Examples include:

• Grant Thornton Advisers’ acquisition of Grant Thornton New Zealand.
• TPG Rise’s acquisition of a 75% share in Kinetic.
• The sale of the North Island assets of Synlait to Abbott Nutrition.

Beyond capital, they often come with a completely different playbook. In some cases, this manifests itself in the form of deal‑terms that would not be considered ‘market’ in New Zealand. In other cases, US buyers are insisting on entirely US‑style deals (even governed by US law). The demands can be challenging but should be balanced against the value that these investors bring to the table. It’s important to hire advisers that can help to navigate these challenges and (importantly) to give context and balance. Most US‑style requests can be appropriately managed (it’s how deals transact, successfully, over there!) and so understanding what can be accommodated without undue risk is vital.

Read more on investment trends from the US.

Regulatory changes

One of the most significant developments that will shape the M&A landscape in the coming months is the evolving regulatory environment.

Recent amendments to the Overseas Investment Act (now passed) introduce a consolidated and risk-based approach to screening foreign investment, that applies a three-stage national interest test for acquisitions other than for farm land, residential land and fishing quota. These reforms are expected to speed up inbound investment and accelerate deal timelines for low-risk deals, though greater discretion in high-risk cases introduces potential for political influence.

Equally significant are the Commerce Act reforms which are designed to modernise merger control and give the New Zealand Commerce Commission more tools to intervene in anti-competitive conduct. The substantial lessening of competition test will be refined to explicitly cover mergers that create, strengthen, or entrench market power, while the Commission will be able to assess the cumulative impact of acquisitions made over the previous three years, targeting roll-up strategies that may escape scrutiny when viewed in isolation.
The Commission will also be empowered to accept behavioural remedies as a condition of clearance or authorisation (subject to some important limits), adding flexibility to the merger review process. New stay and hold powers will allow the Commission to temporarily suspend a transaction, or a proposed transaction, for up to 40 working days to allow it to investigate, while call‑in powers will enable the Commission to require parties to seek clearance for proposed transactions it believes may substantially lessen competition. For complex mergers, the Commission will have more time to reach a decision. These reforms signal a shift toward more active scrutiny of merger activity, particularly in sectors where market concentration is already high, with roll-up strategies and serial acquisitions in industries like banking, grocery, and electricity likely to attract closer attention. Deal timelines may lengthen if the Commission exercises its new pause or call‑in powers, and dealmakers should factor this into their planning and consider approaching the Commission earlier to reduce the risk of delays.

The message for dealmakers is clear: early regulatory engagement is no longer optional but essential for higher risk transactions. Transactions must be structured with regulatory approval pathways in mind from the outset, and deal timelines must reflect the realities of this new environment.

Read more about regulatory changes.

The technology revolution: AI as driver and tool

Artificial intelligence is reshaping the M&A landscape in two fundamental ways. First, investors are convinced that technological transformations and AI investments will be a key driver of transactions in the coming years. Companies seeking to acquire AI capabilities or integrate AI into their operations will drive deal activity, particularly in the technology sector where New Zealand has established global credentials.

Second, AI is transforming the M&A process itself. Our clients are using AI technologies to analyse large data rooms and documents during due diligence, with many now expecting AI to improve the integration and separation process. This technological evolution promises to accelerate deal timelines and improve decision-making quality, though poor data quality and availability remains the biggest hurdle.

But many investors remain cautious. Global dealmakers are worried that the current AI hype is leading to unrealistic company valuations, and some think that the complexity of integrating AI systems is an obstacle to deal-making. For New Zealand’s technology companies, this presents both opportunity and risk: while AI capabilities will command premium valuations, buyers will be increasingly sophisticated in distinguishing genuine AI innovation from marketing hype.

The end of the road for some?

New Zealand’s economy has weathered some challenging years, with many businesses (particularly in the mid-market) feeling the squeeze from the COVID hangover, high interest rates, softening consumer demand, labour and input cost inflation, and tight credit conditions.

Yet the tidal wave of insolvency that was much predicted (including by us!) has never eventuated, as Kiwis muddled through, and the banks remained patient. While there have been a handful of notable failures, by and large the vast majority of New Zealand businesses have weathered the storms.

But now, in recent months, we have started to see an uptick in formal insolvency appointments. Perhaps counterintuitively, this is often seen as a sign of recovery. We saw a similar pattern following the GFC as businesses in a ‘leapfrog environment’ got left behind by quicker-to-adapt competitors, lack of capital investment and lack of liquidity in the market. As the recovery begins, the winners have emerged and the losers have become more exposed.

The other notable trend is that, as global investors have piled into the large AI companies, other tech start-ups (including smaller AI start-ups) have been starved of cash and have started to fold.
We’ve been involved in several distressed deals in the last 12 months (the acquisition of Exsurgo by Vermillion being a good example) and we expect that trend to continue in 2026.

The year ahead: Cautious optimism

As we enter 2026, we are cautiously optimistic. Global conditions are improving, capital is available, and strategic imperatives are driving dealmaking.

Based on strong recent performance, we expect technology driven companies to lead M&A activity in the year ahead, followed closely by financial services, with healthcare, infrastructure, and renewable energy also attracting significant investment. These deals will be supported by improving economic conditions, favourable demographic trends and pro-investment regulatory settings.

However, success will require careful navigation of regulatory complexity, with the new OIO and Commerce Act regimes prompting early engagement and extended timelines for higher risk transactions.
Sellers will also have to maintain realistic valuation expectations as the market continues to recalibrate from the 2021–2022 peaks.

The general election will be a significant factor in how things play out, with a National-led government likely to implement a capital recycling programme leading to partial sales of state-owned assets. The rates rise cap is also expected to put funding pressure on local government with many likely to divest non-core assets.
With PE leading the charge and infrastructure-plus investments gaining momentum, 2026 is poised to be a big year for M&A.

For New Zealand dealmakers, the opportunity is clear: leverage our strengths in technology, healthcare and innovation whilst learning from the challenges of recent years.

Those who engage early with regulatory requirements, who prepare thoroughly with deal-ready data rooms and vendor due diligence, who embrace flexible structures including earn-outs, minority investments and hybrid pricing mechanisms, and who build genuine value propositions beyond financial metrics, will be best positioned to succeed in what promises to be a dynamic and transformative year for the M&A industry.

 Read more  on the hot sectors for 2026.

Footnotes

[1] Morgan Stanley sees broader M&A rebound in 2026, upgrades Jefferies, Investing.com

[2] M&A Volume Set to Top $5 Trillion in 2025, Says Apollo’s Zelter, Bloomberg