M&A market expects clear upward trend in 2026: Companies anticipate increased deal activity

Results of KPMG's "M&A Outlook 2026" in Germany:

• Status in 2025: Deal numbers are 12 percent below the previous year, while volume rises by 30 percent
• Outlook for 2026: 42 percent of market players expect an increase in M&A activity; companies and investors plan 13 percent more deals on the buyer side and 30 percent more deals on the seller side
• Braking factors: 74 percent of companies cite geopolitical risks; buyers are burdened by high financing costs, sellers primarily by the inflationary environment
• Artificial intelligence: 77 percent consider the role of AI to be a lever for value creation and thus a key driver of future M&A activity; at the same time, 71 percent see the AI hype as a factor contributing to excessive valuations 

The German M&A market is starting 2026 with confidence: companies, private equity firms, and family offices expect a noticeable upturn in transaction activity. After a year with fewer but significantly larger deals – in the period from Q4 2024 to Q3 2025, the number of transactions fell by 12 percent, while the total volume rose by 30 percent – expectations are growing that both the volume and number of deals will increase in 2026. Many decision-makers assume that market conditions will stabilize, postponed projects from 2025 will be made up for, and larger strategic transactions will regain relevance. This is shown by the new "M&A Outlook 2026," for which KPMG surveyed 200 top decision-makers from the M&A environment.

For 2026, companies expect an average of 13 percent more transactions on the buyer side and an 11 percent increase in transaction values (from an average of USD 822 million in 2025 to USD 913 million in 2026). On the seller side, the number of transactions will increase by an average of 30 percent and the average value by 9 percent from USD 561 million to USD 612 million.

The upward trend is also confirmed by models calculated specifically for the study, which KPMG developed in collaboration with the economic research institute Oxford Economics – albeit with a flatter dynamic than in the survey: Domestically, around 800 transactions with a volume of USD 38.2 billion are expected in 2026. Foreign buyers in Germany also remain a stable factor: The model expects 623 deals with a total volume of USD 42.6 billion in 2026. German buyers abroad will be more cautious in 2026, with 460 transactions and a volume of USD 16.7 billion. This is mainly due to global trade conflicts and increased financing costs. For all three deal types, the models forecast a significant increase in activity and volume through 2028. Here, the number of deals completed will be 2,853 (+45 percent compared to 2025) and the total volume will be USD 131.8 billion (+15 percent compared to 2025).

Despite the expected upturn, there are factors that could slow down the M&A market next year. Geopolitical risks in particular are causing uncertainty: 74 percent of companies see the Ukraine-Russia conflict as the most important influencing factor, followed by trade relations with China. On the buyer side, high financing costs are the biggest obstacle (64 percent), while sellers predominantly view the inflationary environment as a burden (85 percent). In addition, differing views on company valuations continue to hamper the willingness to transact on both sides. Government measures, on the other hand, play a minor role: the majority do not expect any noticeable impetus from either the new federal government or the immediate investment program.

The use of AI in the M&A process is still in its infancy. Only 3 percent of companies use agentic AI solutions, while 13 percent use generative AI in their operations. The majority are in transition: 35 percent are piloting agentic AI applications or plan to use them within the next twelve months, while 31 percent are doing the same for generative AI. Private equity and family office investors are slightly ahead, but are also predominantly in the early pilot phases. Seventy-four percent of respondents cite poor data quality and availability as the biggest hurdle.

AI is most widely used in due diligence: 77 percent of companies and 70 percent of PE firms use technologies to analyze large data rooms and documents. Respondents also see clear advantages for the post-closing phase: 83 percent expect AI to improve the integration and separation process.

At the same time, there is a growing expectation that AI itself will become a driver of M&A activity: 77 percent are convinced that technological transformations – and AI investments in particular – will be a key driver of transactions in the coming years. Nevertheless, skepticism remains high: 71 percent warn that the current AI hype is leading to unrealistic company valuations, and 67 percent see the complexity of integrating AI systems as a relevant obstacle to deal-making. "The pressure to transform is enormous. Those who do not use AI will lose momentum and competitiveness. Due diligence in particular shows that artificial intelligence speeds up processes and improves the quality of data analysis. In the coming years, this potential for efficiency will increase exponentially once again," says Michael Buhl.

KPMG AG Wirtschaftsprüfungsgesellschaft
Clemens Reisbeck
T +49 89 9282 1722
creisbeck@kpmg.com
www.kpmg.com/de