M&A Landscape Shifts Focus in 2026
Mergers and acquisitions (M&A) are poised to play a pivotal role in capitalizing on emerging investment themes, such as technology and post-globalization trends, according to Bain’s 2026 outlook. The report indicates a shift from rebound momentum to reinvention discipline this year, highlighting M&A as a crucial strategy in navigating a changing economic landscape.
Approximately 80% of M&A executives anticipate maintaining or increasing transaction activity in 2026, driven by an improving macroeconomic backdrop and a plethora of assets available for acquisition. However, boards are expected to implement stricter return on investment (ROI) thresholds, as acquisitions increasingly compete with dividends, buybacks, and reinvestment strategies aimed at capital expenditures (capex) and research and development (R&D). This reevaluation underscores a growing emphasis on accessing resilient supply chains rather than merely owning assets.
Among the trends anticipated to significantly impact M&A flows this year is the continued influence of artificial intelligence (AI), which was involved in over half of all tech-related transactions last year. Despite many emerging technologies still being in nascent stages, sectors aligned with technology, such as machinery and equipment, are expected to see substantial activity. In 2025, 20% of tech acquisitions were linked to manufacturing equipment, illustrating a robust trend.
Bain’s report also points to the escalating use of AI in due diligence processes. This approach aids in stress-testing assumptions around costs, revenues, and integration strategies, as the competition intensifies, leading to a diminished tolerance for narrative-driven underwriting.
The evolving geopolitical climate is likely to catalyze a surge in alignment and divestment strategies, with M&A serving as a mechanism for companies to either consolidate relations with international partners or withdraw and divest from others. Although 70% of executives indicated in 2025 that trade restrictions would not impact their divestment plans, fragmentation is reshaping capital deployment strategies. This trend is driving a greater reliance on minority stakes, joint ventures, and carve-outs as companies seek to mitigate risks without exposing their entire balance sheets.
Another notable shift is the trend of companies bypassing traditional intermediaries to engage directly with consumers, fundamentally altering capital allocation dynamics.
By industry, private equity investment in the defense sector is experiencing a notable uptick, particularly in Europe, while the medtech sector is seeing valuations increasingly influenced by divestitures and spin-offs. In the mining industry, there is a marked pivot from greenfield projects to acquisitions. The oil and gas sector’s M&A activity is becoming increasingly concentrated among a few major players, whereas in pharmaceuticals, the focus on next-gen drug development is driving larger pharmaceutical companies to acquire smaller firms to secure comprehensive pipelines. In software, the emphasis is on identifying future-proof targets for AI acquisitions.
As the Tadawul All Share Index (TASI) fell by 0.7% on Thursday, closing at 11,382, the index has still gained 8.5% year-to-date. The day’s trading volume reached SAR 6.9 billion, with standout performers including Amak, SMC Healthcare, and Bjaz, all of which saw gains exceeding 4%. Conversely, Red Sea, SVCP, and CGS faced declines of over 5%.
Meanwhile, the NomuC index rose by 0.2%, closing at 23,911, with a year-to-date increase of 2.6%. Notable gainers included Horizon Food, Mayar, and Apico, while companies like Time and Amwaj International faced significant declines.
The evolving M&A landscape underscores a broader significance in how companies strategize and position themselves within their respective markets. As firms navigate this complex environment, the integration of advanced technologies and adaptive strategies will likely dictate success in the coming year.
For more insights on M&A trends, visit Bain & Company’s official website here.
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