M&A Radar H1 2026: Ukraine

Even amidst the fifth year of Russia’s full-scale invasion, Ukraine has been able to navigate wartime challenges with varying levels of success. M&A activity in H1 2026 has remained stable in terms of deal volume, albeit with a lower level of transparency in terms of deal values (45%). Despite a decline in terms of deal value year-on-year, current trends indicate expectations of a gradual improvement in H2 2026; with stability in terms of transaction volumes in H1 2026  creating a platform for further market development. Notable sectors which are expected to see increased investment attention include innovations and technology (including defence), agriculture, power and utilities, and consumer markets, all of which continue to account for a significant share of recent Ukrainian deal activity.

Ukraine’s defence sector has seen strong momentum in H1 2026. An increase in the number of transactions exceeding USD5 million, the first IPO of a Ukrainian defence-tech company, and the emergence of Ukraine’s first defence-tech unicorn all potentially signal a scaled-up investment phase in this market segment later in the year, supported by growing interest from investors. However, while perceived appetite for Ukraine’s defence-tech market remains high, international investors are still cautious about making decisions given both ongoing concerns about site safety and existing state restrictions on arms and dual-use goods exports, as well as enhanced market entry FDI screening procedures.

A number of local and international funds with funding programmes subject to multi‑year deployment horizons (such as Ukraine’s Horizon Capital and the US DFC) have also announced their intention to invest in Ukraine in the near term. The capital from such funds is expected to be deployed gradually, with this disbursement underpinning future deal flow in both H2 2026 and subsequent periods. The United States-Ukraine Reconstruction Investment Fund, for example, recently approved the first investment in Ukrainian UAV tech solution company Sine.engineering from its USD150 million of seed capital, with a stated goal of signing two more investment deals this year.

Market conditions may also indicate a potential increase in investment activity, with deal momentum in Ukraine traditionally improving throughout the second half of the year. 2027 should also see inflation dynamics gradually normalise, with continued support from the Ukrainian government, central bank, and international partners potentially contributing to an increased measure of stability for Ukraine’s business environment both this year and next. Improving market sentiment also implies increasing confidence in improved investment momentum for H2 2026, with 87% of businesses surveyed by the American Chamber of Commerce reporting that they will maintain or increase planned investments over the second half of the year.

Nonetheless, any acceleration in general transaction activity and improvements to the market as a whole may also be tempered by the same factors that previously constrained investor appetite and Ukrainian economic growth, with investment interest still influenced by the same macroeconomic and security conditions that have affected Ukraine since the start of Russia’s full-scale invasion in 2022. Structural constraints in 2026 largely mirror those observed in previous years, including tight labour market conditions, persistent skills gaps, ongoing energy supply concerns, and the potential for further escalation in terms of attacks on infrastructure and property.

Addressing such issues will take targeted initiatives, with the necessary investment of both time and money to address ongoing structural problems. In this respect, some of the seeds of planned initiatives are slowly beginning to bear fruit. Ukraine’s overall M&A environment continues to benefit from the expansion of war risk insurance instruments, for example, as well as sustained support from international financial institutions and development agencies, both of which will help to mitigate investment risks and facilitate capital inflows. Recent examples of foreign support for Ukraine’s private sector include the agreement of a EUR1.1 billion risk-sharing package at the Ukraine Recovery Conference 2026 in Gdańsk, with input from the EBRD, the EIF, and Ukraine’s PrivatBank looking to boost domestic lending to Ukrainian businesses.

Meanwhile, decentralised energy supplies and an increasingly flexible Ukrainian energy model represent an ongoing developmental trend and a necessity in the face of Russia’s attacks on civilian and state infrastructure. Such energy sector developments are gathering pace and could provide a springboard for Ukraine’s post-war green transition, including attendant implications for EU energy integration. Such transformation will be vital if Ukraine is to accomplish its goal of 27% of energy derived from renewable sources by 2030, as stated in Ukraine’s National Energy and Climate Plan 2025–2030 (as opposed to just 11% of production structure and 20.4% of national installed generating capacities at present).

H1 2026 has also seen jobs interest improve to approach pre-war levels, with the increasing ratio of CVs to new vacancy postings implying a greater level of job-search activity and a potential gradual recovery in terms of labour supply. Ukraine’s draft Labour Code, signed on 7 January 2026, also has the capacity to attract labour to the official market, increase domestic production of previously imported goods, and improve real economic growth, with significant influence on investment-led post-war recovery prospects. Companies are also noted as increasingly turning to older employee cohorts, with a growing number of job candidates aged 50+ helping to reduce skills gaps for administrative and logistics roles, as well as addressing personnel and staffing issues in the industrial manufacturing, agriculture, and medical sectors. Governmental initiatives such as the “Experience Matters” older worker internship programme hope to expand on this current trend.

To ensure that Ukraine addresses existing challenges and further facilitates business environment improvements, the government will now need to address concerns regarding deregulation, simplified tax administration, and reversing population displacement, possibly through programmes to encourage displaced workers to return to Ukraine. These steps, among others, would help improve investment prospects in the short term, as well as enhancing potential post-war reconstruction and recovery prospects.