M&A in a time of geopolitical turmoil

Dealmakers are being more selective and concentrating their bets to cope with AI, tariffs and instability in the Middle East, says Jerome Pottier

A trillion dollars of dealmaking in under three months should feel like a boom. By the numbers, it is. Activity is up 27 per cent year on year, and the megadeal is back. Deal formation is still building. New deals initiated on Datasite rose nine per cent in 2025, and that momentum has carried into 2026, with a further six per cent global increase in the first two months of the year.

Yet boardrooms are moving more deliberately, recalibrating value in a world reshaped by tariffs, AI and regional destabilisation in the Middle East. Technology, media and telecoms remain among the most active sectors, but dealmakers are being more selective and concentrating their bets.

Fewer deals, higher stakes

Buyers with strong balance sheets are pursuing high-confidence acquisitions, while the mid-market remains relatively subdued. Last year, deal values surged 36 per cent, driven by a rise in megadeals from 63 to 111. The result is a K-shaped market in which a handful of large transactions dominate. Each major deal matters more because there is less volume underneath to absorb a failed process.

Boards and advisers feel it in the way deals are being prepared, including longer diligence cycles, more stakeholders and greater pressure on data governance and process. In a market defined by scale, the margin for error has rarely been smaller.

Three forces reshaping execution

Three forces are making execution harder. First, tariffs introduce scenario planning that didn’t exist two years ago: buyers now have to value a business not just as it stands today, but under multiple trade regimes that could emerge within the deal timeline. Second, geopolitics, such as the war in Iran, adds regulatory and political risk to cross-border transactions, which can make it more difficult to model and harder to price transactions. Additionally, as surging energy costs erode corporate margins, dampen consumer confidence, and introduce macroeconomic uncertainty, dealmakers across all sectors may pause, widen valuation gaps, and defer transactions until the outlook stabilizes. 

Third, AI is changing diligence and underwriting. It reduces informational uncertainty by surfacing patterns and testing assumptions faster, but it increases strategic uncertainty about defensibility and where profit pools will sit. Capital remains available, yet buyers are asking tougher questions about automation leverage, margin compression and whether management teams have a credible plan to adapt. AI hasn’t stopped M&A – it has raised the underwriting bar.

Speed vs rigour

Speed has become the defining competitive advantage, and where mistakes compound. Goldman’s message this month – don’t wait for perfection – is right in principle. Windows open and close faster, and hesitation is expensive. But moving quickly in this environment requires infrastructure, not just conviction. The firms consistently closing are the ones that have invested in processes and platforms that let them act with rigour at speed. The gap between firms that can operate this way and those that can’t is widening.

Is the current market sustainable? For some dealmakers, yes. For many others, it depends on whether activity broadens beyond a handful of large processes. The market is concentrated, reacts quickly to macro shifts and relies on a small number of megadeals to set the tone. Up close, it is less balanced than the topline suggests.

Still, the fundamentals are real: dry powder is at record levels, rates are stable, and the strategic pressure to consolidate isn’t going away. The firms that win in this environment treat execution as a capability, not an afterthought. In a trillion-dollar market full of uncertainty, how you run the process is now as important as the decision to do the deal.

Jerome Pottier is EMEA chief revenue officer at Datasite