AI, geopolitics, and capital redirection will shape M&A activity in 2026 -Bain

It’s a pivot from rebound momentum to reinvention discipline for M&A this year, according to Bain’s 2026 outlook (pdf). M&A is set to be a key tool for capturing gains as themes like tech and post-globalization dominate the investment scene.

Activity looks set to hold up: About 80% of M&A executives expect to sustain or increase transaction activity this year, as the macro backdrop improves and a growing number of assets are ripe for exiting. Boards are likely to set higher ROI thresholds as acquisitions compete head-to-head with dividends, buybacks, reinvestment via capex, and R&D, and reconsider the importance of accessing assets through resilient supply chains, as well as simply owning them.

Among the trends set to shape M&A flows next year: AI, which had a foot in over half of all tech-related takeovers last year. While lots of emerging tech is still in the early stages, sectors linked to technology like machinery and equipment are set for a big year, following on from 2025, which saw 20% of tech acquisitions involve manufacturing equipment.

AI is quietly reshaping the workflow: Beyond influencing what gets bought, Bain points to rising use of AI in diligence to stress-test cost, revenue, and integration assumptions, reflecting lower tolerance for narrative-driven underwriting as competition intensifies.

A shifting geopolitical landscape will see a flurry of alignment and divestment, with M&A a way for companies to either retrench in line with international partners or pull back and divest from others as they evaluate trade-offs including proximity to clients and supply chains. In 2025, 70% of executives told Bain that trade restriction policies would not affect divestment plans — but fragmentation is reshaping how capital is deployed, driving greater use of minority stakes, joint ventures, and carve-outs to manage risk without full balance-sheet exposure.

Another sign of the times is the cutting out of the middle man, as traditional intermediate players are bypassed with firms going straight to the source with consumers, shaking up where capital is directed.

By the industry: Private equity in defense is rising sharply, with Europe being an epicenter for agreements, medtech agreement valuations are being led by divestitures and spin-offs, and the mining industry is pivoting from greenfield projects to acquisitions. In oil and gas, M&A is increasingly being dominated by a few big names, while in pharma, trendy, next-gen drugs are leading big pharma to snap up smaller fish to secure an end-to-end pipeline. Over in software, the focus is on identifying future-proof AI takeover targets.

**Missed our 2025 coverage? We wrote that global M&A snapped back unevenly last year: transaction value surged while volumes lagged, tech — especially AI-linked transactions — carried the rebound, scope strategies hit record share, and M&A still lost the budget fight as companies kept acquisition spending at roughly 7% of total capital allocation, with capex and R&D taking priority.

MARKETS THIS MORNING-

Asian markets are mixed this morning, with South Korea’s Kospi and Japan’s Nikkei both in the green, and China’s CSI 300 and Hong Kong’s Hang Seng in the red. Over on Wall Street, futures point to another volatile trading day with a likely lower open, as tech jitters continue to weigh on markets.

THE CLOSING BELL-

The ADX fell 0.3% yesterday on turnover of AED 1.3 bn. The index is up 3.7% YTD.

In the green: Agility Global (+3.1%), Rapco Investment (+2.5%), and Abu Dhabi National Hotels Co. (+2.5%).

In the red: Al Wathba National Ins. Co. (-8.6%), Sudatel Telecommunications Group Company (-4.5%), and Abu Dhabi National Co. for Building Materials (-4.0%).

Over on the DFM, the index fell 0.5% on turnover of AED 742 mn. Meanwhile, Nasdaq Dubai was up 0.6%.