Frank Aquila on 2026 M&A Trends: Megadeals, AI, Pricing, and Deal Certainty

2025 M&A Landscape: A Tale of Two Halves

• 💡 The first half of 2025 saw a pause in M&A due to a new administration and policies, but the second half became one of the busiest on record.
• 🎯 Unlike previous boom years, 2025 was characterized by mega deals (often $5B+), with smaller and middle-market transactions being less prevalent.
• 🚀 This focus on large, strategically important deals is expected to continue into 2026.

Evolving Buyer-Seller Dynamics and Industry Activity

• 💰 A pause in the first half made sellers more realistic about pricing, leading to more achievable premiums for buyers.
• 📈 Buyers increasingly focused on the strategic importance and game-changing potential of transactions, not just price.
• 🏦 Active sectors included tech, entertainment, healthcare, life sciences, and notably, a resurgence in banking and financial institution transactions, driven by the need to invest in AI capabilities.

Defining Deal Certainty and Evolving Structures

• 🔍 Deal certainty hinges on factors like solid financing, backup funding sources, shareholder approval, and crucially, regulatory approval.
• 🤝 To bridge valuation gaps, especially in sectors like healthcare and AI, contingent value rights (CVRs) are becoming more common, allowing for additional payouts if specific future milestones are met.
• 🧩 CVRs and similar mechanisms are vital for getting deals across the finish line, particularly for nascent technologies like AI.

The Pervasive Influence of AI in M&A

• ⚡ AI is a dual driver: it's motivating acquisitions as companies seek AI capabilities and talent (aqua hires).
• 🛠️ AI technology is also being used to source deals and conduct initial due diligence, profoundly impacting the M&A process.

Creating Value vs. Hype in Acquisitions

• ✅ True value creation comes from deals done for strategic reasons aimed at long-term goals (e.g., building the company of 2030), rather than solely for short-term financial engineering or stock price pops.
• 🚀 Buyers who prioritize day-one integration planning are more likely to create lasting value.

Outlook and Readiness for 2026

• 🗓️ Trends from late 2025, including a focus on strategic megadeals and AI integration, are expected to continue into the first half of 2026.
• 🌍 Executives should monitor geopolitics and shore up funding sources.
• 🤝 Keeping boards informed throughout the strategic planning process is crucial for gaining support and ensuring readiness for opportunities.
• 📈 Boards and executives should ensure financing is lined up, understand regulatory risks, and be prepared for day-one implementation.