The global M&A market remains on course for another exceptionally strong year, with deal activity increasingly driven by strategic transformation rather than financial engineering, new research from Bain & Company shows.
Global deal value reached $2.4tn during the first five months of the year according to the company’s 2026 Midyear M&A Report, up 41% year-on-year – and putting 2026 on track to exceed $5.3tn in announced transactions.
For private equity firms and institutional investors, the report offers a picture of an increasingly bifurcated market. Strategic buyers continue to dominate large-cap transactions, while financial sponsors face a more challenging environment for deploying capital into buyouts.
At the same time, venture and growth investors are benefiting from unprecedented demand for AI-related businesses, the report suggests.
The strongest growth has come from corporate acquirers pursuing transformational acquisitions designed to improve scale, resilience and technological capability. Bain found strategic M&A value increased 36% year-to-date, while deals valued at more than $10bn rose by more than 50% both in number and aggregate value.
For GPs, the trend reinforces growing competition from strategic buyers for high-quality assets, particularly businesses offering AI capabilities, digital infrastructure or critical technologies. Corporate acquirers are increasingly willing to pay for strategic value rather than relying solely on traditional financial return metrics.
The report also notes that transaction structures are evolving. Stock-and-cash consideration accounted for 35% of megadeal funding, the highest proportion on record, while fully cash-funded transactions fell to a cyclical low.
AI changes the investment equation
Perhaps the report’s most significant conclusion for investors is that artificial intelligence is no longer simply creating investment opportunities; it is changing how acquisitions themselves are evaluated and integrated.
Bain argues that acquirers increasingly face what it describes as a “winner’s paradox”: simultaneously executing large-scale acquisitions while undertaking enterprise-wide AI transformation programmes.
For private equity managers, the findings reinforce the growing importance of AI within portfolio value creation plans. Rather than treating digital transformation as a standalone initiative, firms may increasingly view acquisitions as opportunities to redesign operations, automate workflows and accelerate technology adoption immediately following completion.
The consultancy also argues that AI is shortening parts of the diligence process. Integration teams are reportedly using AI tools to identify procurement savings, operational efficiencies and commercial opportunities significantly faster than traditional approaches, potentially allowing sponsors and strategic buyers to underwrite more ambitious synergy assumptions.
Sponsors remain selective
While strategic buyers accelerated activity, financial sponsor deal value declined 9% through May, reflecting continued discipline around pricing, financing costs and exit conditions.
The figures suggest many buyout firms remain cautious despite improving debt markets, with sponsors prioritising value creation within existing portfolios over aggressive acquisition programmes.
Growth capital presents a markedly different picture. Venture capital and corporate venture capital investment surged 206% during the period, driven by major AI fundraising rounds, including OpenAI’s $122bn financing, alongside a 36% increase in deal volumes.
For LPs, the divergence highlights how capital continues to concentrate around technology and AI-focused strategies, while traditional buyout fundraising and deployment remain more measured.
Europe accounted for some of the strongest growth in global M&A during the first half of the year, with deal value across EMEA increasing 77% year-on-year.
The report attributes much of the activity to companies seeking domestic consolidation, greater regional scale and stronger global competitiveness. Several announced megadeals illustrate how European corporates are using acquisitions to strengthen strategic positioning across increasingly fragmented markets.
The renewed activity may provide a more supportive backdrop for European private equity exits if strategic acquirers continue to pursue large-scale acquisitions over the coming quarters.
Implications for fundraising
Although the report focuses on M&A rather than fundraising, its conclusions carry clear implications for capital formation.
Institutional investors continue to allocate towards managers with differentiated access to AI-enabled growth opportunities, while GPs increasingly need to demonstrate sector expertise and operational capabilities beyond financial structuring.
The slowdown in sponsor-led deal activity may also reinforce LP focus on managers capable of creating value operationally rather than relying on multiple expansion. As competition from strategic buyers intensifies for premium assets, fund managers are likely to face greater scrutiny over sourcing advantages, post-acquisition execution and technology expertise during fundraising processes.
For growth equity and venture managers, however, continued corporate demand for AI-related businesses could support both fundraising momentum and future exit opportunities.
Bain concludes that companies can no longer separate acquisition strategy from technology transformation. Large-scale integrations increasingly provide the opportunity to modernise operating models while embedding AI throughout acquired businesses.
For alternative asset managers, the message is equally relevant. Success in fundraising and deployment may increasingly depend not simply on access to capital, but on demonstrating the operational capabilities required to create value in an AI-driven economy.
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