A vibrant 2025 has shifted into a volatile 2026 characterized by geopolitical uncertainty, notably marked by an unprecedented oil shock.
Investment bankers concluded 2025 on an optimistic note.
In January, Barclays referred to the “exceptional” circumstances as 2026 began. Global mergers and acquisitions (M&A) volumes surpassed $5 trillion in 2025, with the London-based bank echoing a sentiment shared by its contemporaries: “All signs point to the momentum in M&A continuing well into 2026.”
That assessment has proven inaccurate.
According to preliminary data from Dealogic, global M&A activity has experienced a downturn in the first quarter of 2026. The total deal value has dropped to about $1.08 billion, with deal volume plummeting nearly 28% to 7,740 deals, compared to $1.15 billion and 10,760 deals in the same quarter of 2025. Industry professionals interviewed by Global Finance anticipate a continuation of this decline.
Amit Thakur, managing partner at Amax Capital, noted that, “This year started on a reasonably upbeat note, but I believe the overhang of the geopolitical events of the recent weeks will depress both broader business sentiments as well as deal volumes.”
The “geopolitical events” in question refer to the onset of the US-Israeli conflict with Iran in late February, leading to spikes in oil prices and significant supply disruptions, particularly due to a near-total halt of shipping through the Strait of Hormuz. As of now, crude oil futures have risen over 73% year-to-date.
Thakur underscored that oil prices are merely one aspect of a larger narrative. Rising energy costs and market fluctuations are prompting corporate acquirers and financial sponsors to adopt a more cautious strategy. Elevated interest rates, combined with aversion to risk stemming from the economic implications of the Iran conflict, are likely to further hinder financing. This presents a challenge for investment banks, as they must navigate prolonged uncertainties stemming from international conflicts.
Thakur emphasized, “The disruption in the Gulf Cooperation Council region, many of whose sovereign funds were significant contributors to deal and investment volumes in 2025, is expected to meaningfully dampen deal flow.” He added that the duration and extent of this impact remain uncertain.
“Boom” And Gloom
Following several subdued years when companies hesitated to pursue large transactions, many bankers had anticipated a resurgence in deal-making. While initial expectations were moderated due to the ramifications of Trump-era tariffs on global trade, by May, the Financial Times popularized the acronym TACO: Trump Always Chickens Out, which encapsulated market resilience amid fluctuating trade policies.
Rick Smith, founder and managing director at Forbes Burton, remarked that the uncertainty surrounding tariffs did not hinder the boom for long, culminating in a notable surge in late 2025. He stated, “Buyers just needed the right impetus for market movement, and AI seemed to be just the thing to capture the imagination of many.”
In 2025, over 600 AI-related M&A deals were announced globally, an increase from 489 in 2024, according to data from 451 Research, a segment of S&P Global Market Intelligence. The year concluded with IBM’s $11 billion acquisition of Confluent, marking a definitive boom that restored confidence among investment banks. The enthusiasm for 2025 had mirrors of 2021, which saw record M&A volumes returning post-Covid-19, surpassing $5 trillion for the first time.
Smith characterized 2025 as “a roller-coaster year,” yet the excitement has not carried over into 2026 as anticipated.
“That surge doesn’t seem to be bleeding into 2026 as we might have expected,” he pointed out, noting the rationale behind these shifts.
Historically, the deal economy has demonstrated vulnerability to international occurrences. The pandemic instigated a “pause” in deal-making, giving rise to pent-up demand that fueled the M&A activity observed in 2021-2022 as markets began stabilizing. Additionally, the Russian invasion of Ukraine introduced another significant decline in M&A activity, resulting in geopolitical uncertainty, sanctions, and fluctuating energy prices.
These instances highlight “just how closely global incidents are entwined with business,” Smith elaborated, cautioning that the current Middle East conflict could lead to far-reaching consequences.
Trends and Noteworthy Deals
In March, the Bank of Canada indicated that the ongoing Middle East conflict has heightened volatility in global energy prices and financial markets, contributing to significant economic uncertainty. Prior to the outbreak of war, the Canadian central bank forecasted 3% global growth in 2026; however, escalating oil and gas prices have intensified inflationary pressures.
The convergence of rising interest rates, inflation, and geopolitical instability is influencing the investment banking sector, leading to a reduction in debt issuances, equity deals, IPOs, and M&A transactions. Market analysts predict that bankers will be more selective regarding deal size and structure while focusing on resilient sectors such as defense, technology, and healthcare.
These trends are already reflected in diminished deal volumes and streamlining across investment banking workforces. Last month, Morgan Stanley reportedly laid off around 2,500 employees—approximately 3% of its global workforce—in various divisions, including investment banking and trading. Citigroup followed suit, planning additional job cuts after already reducing approximately 1,000 positions in January.
Despite these challenges, several significant transactions have already made headlines in 2026. Deutsche Börse AG’s $6.19 billion acquisition of Allfunds Group plc stands as the largest deal in the history of the Frankfurt Stock Exchange operator, eclipsing its 2023 purchase of SimCorp.
In a landmark move, Google finalized its largest acquisition to date, a $32 billion agreement for cloud security platform Wiz. This transaction more than doubles the company’s previous record of $12.5 billion for Motorola Mobility in 2012 and represents the largest enterprise security acquisition in technology history. This deal underscores Google’s strategic push into cloud security and AI-driven solutions, responding to escalating demand for enhanced enterprise security as companies transition to cloud infrastructures.
Meanwhile, the healthcare and pharmaceuticals sectors are catalyzing innovation through significant acquisitions. Notable transactions include Eli Lilly’s $1.2 billion purchase of Ventyx Biosciences in January and the $2.4 billion acquisition of Orna Therapeutics the following month, as well as GSK’s completed $2.2 billion acquisition of Rapt Therapeutics last month.
What’s Next
As 2026 unfolds, M&A activity is likely to concentrate on sectors driven by technology and innovation. With cross-border flows experiencing volatility since early last year, Thakur notes heightened concerns among clients in the US and Asia regarding the need for realignment away from the traditional global value chain.
Companies with US-only sales are increasingly exploring manufacturing within other major consuming markets.
“Depending on how the geopolitical events pan out,” says Thakur, “we believe the rest of 2026 is going to be about this theme, even while AI and tech infrastructure—power included—continue to play a dominant role in M&A and investment flows. In any scenario, though, we do not expect 2026 to replicate the volume growth of 2025.”
Research
The reported research and analysis were conducted by Thomas Monteiro, John Njiraini, David Sanders, and Lyndsey Zhang, who reviewed entries and other relevant information. Editors at Global Finance evaluated their assessments and made the final selections, with Corporate Finance Editor Anthony Noto serving as the lead editor. The contributions of Monteiro, Njiraini, Sanders, and Zhang are acknowledged by their initials.
Methodology
Global Finance editors and researchers, alongside input from multiple executives, investors, and consultants globally, utilize specific criteria to determine award winners, which include market share; the number, scale, and complexity of deals; service quality; structuring capabilities; distribution networks; adaptability to market conditions; innovation; underwriting performance; and overall market reputation. Winners are identified through a scoring system that combines information submitted by banks and additional research, applying a proprietary algorithm.
The review includes banks of all sizes, from smaller entities in emerging markets to global powerhouses in the financial rankings. Many winners provide detailed submissions that offer insights not available to the public. Banks that opt not to submit entries may still be recognized as winners through Global Finance’s review process. However, it has been observed that firms submitting comprehensive entries detailing differentiating services achieve better results. Global Finance adheres to journalistic standards and practices to ensure the confidentiality of submitted information.
Executive Insights
Insights were shared by leading executives highlighting strategies for sustained growth and adaptability within the current market context, reflecting the cautious optimism driving investment decisions in the present economic landscape.