Deal executives making peace with uncertainty
- Despite market uncertainty, dealmakers are cautiously optimistic about Europe’s M&A prospects.
- In our survey of 250 corporate and private equity dealmakers and executives, half of respondents expect activity to increase in the next 12 months - down slightly from last year, when 65% were expecting an increase. 85% expect to engage in M&A in the coming year, for corporates, particularly on the buy-side.
- Deal volume in H1 2025 was 8,195, down 11% from the same period in 2024.
- However, total deal value in H1 2025 reached €465 billion, a 3.6% year-on-year increase.
- Over a third of the respondents (34%) believes that difficulties in arranging deal financing will be a major obstacle to M&A in the coming year. Buyer-seller valuation gaps (30%) are also a concern.
- The impact of trade wars is weighing heavily on the market. 26% of the respondents describe trade-related disruptions as a major obstacle to M&A, up from just 10% last year.
- More than a third of the respondents (38%) say distress-driven M&A will propel sell-side activity in Europe. Respondents expect buy-side drivers to be undervalued targets and turnaround opportunities (both cited by 31%).
- The largest share of respondents (38%) expects the Benelux region to see the highest M&A growth in the next 12 months, placing it in top spot for the second year in a row. The UK&I, Austria and Switzerland are also expected to drive M&A growth.
- Over half of the respondents (51%) believe that cash reserves will be the most available source of finance in the next 12 months, followed by debt capital markets (38%).
According to CMS’s 2026 European M&A Outlook, half of dealmakers expect the level of European M&A activity to increase over the next 12 months, even in the face of considerable market volatility. The Outlook was published today in association with financial data firm Mergermarket.
Signs of recovery in 2024 were obscured in early 2025 by a pronounced period of market uncertainty, driven by trade tariffs. Deal volume in H1 was down by 11% relative to the same period in 2024 – however, aggregate transaction value proved more robust, rising by 3.6% year-on-year, demonstrating that dealmakers are still ready to put money to work for the right assets.
Despite geopolitical uncertainty and financing challenges, the report highlights Ukraine as an emerging strategic partner and innovation hub in the European M&A landscape. Following Russia’s full-scale invasion in 2022, Ukraine has rapidly integrated into EU defence frameworks and attracted growing interest from international investors. The CMS report notes a surge in domestic and outbound M&A activity, particularly in battlefield-driven technologies, infrastructure, and energy. Ukraine’s increasing relevance in defence sector dealmaking is underscored by its alignment with EU sovereignty protocols and its role in regional security.
Non-core divestments, digitalisation and strategic growth
Respondents expect the greatest sell-side drivers of M&A activity in Europe over the next 12 months to be non-core asset sales from larger companies (42% of top-two votes) and, relatedly, distress-driven M&A (38%). Private equity divestments (36%, including 25% of first-choice votes) are also expected to feature prominently, with funds under pressure to return capital to investors.
On the buy-side, dealmakers expect a variety of factors to propel M&A, from undervalued targets (31%) and turnaround opportunities (also 31%) to supply-chain security (27%) and the ubiquitous drive towards greater levels of digitalisation (30%). Many corporates though have their sights set on strategic growth – the most anticipated driver for their acquisitions being transformational deals, with 38% identifying this as a top two reason, followed in second place by growth in new geographies and customer bases.
Securing financing
Most respondents (78%) expect financing conditions in Europe to worsen over the next 12 months, including 29% who believe it will be much harder to secure capital. Unsurprisingly, a large share of dealmakers identifies financing difficulties as a major hurdle to their M&A plans (34% of top-two votes).
Cash reserves are expected to be the most available source of finance (51%), followed by debt capital markets (38%). Moreover, two-thirds of the respondents (67%) are considering using alternative deal structures, such as convertible instruments and earnouts, as part of their M&A financing strategy over the next 12 months.
Prizing political stability
The Benelux region is expected to see the highest growth in M&A activity over the next 12 months, according to our respondent group (38% of top-two votes), followed by the UK & Ireland (29%) and Austria and Switzerland (27%). Respondents are quick to highlight the Benelux region’s supportive investment ecosystem and strong logistics capabilities. Broadly speaking, dealmakers are showing a preference for regions with higher levels of political and economic stability.
Cross-border concerns
Domestic dealmaking will come to the fore over the next 12 months. Among corporate respondents, 51% do not expect to undertake any cross-border M&A. Trade-related and other geopolitical volatility is clearly a point of concern – 26% of the respondents cite trade wars as a barrier to M&A, up from just 10% in last year’s survey.
Outlook for 2026
Despite pronounced market volatility, particularly in respect of EU-US trade policy, dealmakers continue to see opportunity in Europe. A number of positive tailwinds are expected to drive M&A in the near to medium term. European nations are spending more on infrastructure and defence, while regulators are taking steps to improve the region’s competitiveness and attractiveness to international investors.
Read the full CMS European M&A Outlook 2026 here: https://cms.law/en/int/publication/cms-european-m-a-outlook-2026.
For further information, please contact:
Darina Gordienko
E: darina.gordienko@cms-cmno.com
T: +38044 391 3377
Methodology
In Q2 2025, Mergermarket surveyed senior executives from 240 corporates and 90 private equity firms based in Europe, the Americas and Asia-Pacific about their expectations for the European M&A market in the year ahead. Among the 330 executives interviewed, 70% are headquartered in Europe, while the remaining 30% are split equally between the Americas and Asia-Pacific. 92% of all respondents have been involved in an M&A transaction over the past two years and 95% plan to undertake an M&A transaction in the coming year.
All responses are anonymous and results are presented in aggregate.
About CMS:
Founded in 1999, CMS is an international organisation of independent law firms that offers full-service legal and tax advice. With 91 offices in 50 countries across the world, CMS has longstanding expertise both in advising in its local jurisdictions and across borders. From major multinationals and mid-caps to enterprising start-ups, CMS provides the technical rigour, strategic excellence and long-term partnership to keep each client ahead in its chosen markets.
The CMS member firms provide a wide range of expertise across 19 practice areas and sectors, including Corporate/M&A, Energy & Climate Change, Funds, Life Sciences & Healthcare, TMC, Tax, Banking & Finance, Commercial, Antitrust, Competition & Trade, Dispute Resolution, Employment, Labour & Pensions, Intellectual Property and Real Estate.
For more information, please visit cms.law.
About Mergermarket:
Mergermarket blends market-leading human insights, advanced machine learning and 30+ years of Dealogic data to deliver the earliest possible signals of potential M&A opportunities, deals, threats and challenges.
For more information, visit mergermarket.com.
