Global M&A Activity Surges Amid Geopolitical Turmoil and AI Advancements

In the first quarter of 2026, global mergers and acquisitions (M&A) exceeded $1.2 trillion, despite ongoing geopolitical tensions, particularly the conflict in the Middle East. According to data from LSEG, while the number of deals decreased by 17% compared to the same period last year, the total value of transactions increased by 26%. This surge is largely attributed to significant investments in artificial intelligence (AI), with four of the six largest deals involving companies perceived as leaders in the AI sector.

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The ongoing war in Iran and subsequent fluctuations in oil prices have not deterred corporate deal-making. Sam Kim, global head of M&A at Deutsche Bank, noted that companies are adapting to the current volatility rather than waiting for stabilization. He stated, "This is the new normal," highlighting a shift in corporate strategy towards embracing uncertainty in the market.

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Philipp Beck, head of EMEA M&A at UBS Investment Bank, emphasized that strategic rationale is driving deals, which remain robust despite market volatility. He indicated that if the current instability persists, it could alter market dynamics, but for now, corporate boards are actively pursuing M&A opportunities. John Collins, Global Co-Head of M&A at Morgan Stanley, echoed this sentiment, asserting that M&A continues to be a vital component of corporate growth strategies.

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Cross-border M&A activity surged by 47% year-over-year, reaching $454.7 billion in the first quarter, marking the highest level for this period since 2002. The United States emerged as the primary target for these transactions, accounting for 52.4% of cross-border deals, followed by the United Kingdom at 11.5%. Notable transactions included McCormick's acquisition of Unilever's food business in the UK, creating a $65 billion global food entity.

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Despite the positive outlook for M&A, some analysts caution about the potential long-term impacts of geopolitical instability and economic fluctuations. Concerns have been raised regarding the sustainability of high valuations and the risk of overexposure to volatile markets. The decline in activity among software companies deemed vulnerable to AI disruption further illustrates the challenges faced by certain sectors.

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• “This time around people aren't waiting for things to get better, they are recognising that volatility is just part of life and they are working within that construct,” — Sam Kim, Global Head of M&A, Deutsche Bank

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• “Deals are driven by strategic rationale which is stronger than short-term volatility in the market,” — Philipp Beck, Head of EMEA M&A, UBS Investment Bank

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• “Cross-border corporate activity is a defining trend we’re seeing,” — Andrew Woeber, Global Head of M&A, Barclays

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As companies navigate the complexities of the current geopolitical landscape, M&A activity is expected to remain a critical strategy for growth. The focus on cross-border transactions and the influence of AI advancements will likely shape the M&A landscape in the coming months. Corporate leaders are adapting to the new normal, seeking opportunities that align with their long-term strategic goals.

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