Worldwide mergers and acquisitions (M&A) in the third quarter of 2026 totaled $993 billion, a 41% decline from the second quarter and the first time the market has slipped below the $1 trillion mark since the second quarter of 2025, according to data from LSEG.

Fewer megadeals and tighter financing

Only ten deals exceeded $10 billion in the quarter, the lowest count of such megadeals since the fourth quarter of 2024. Notable announcements included Banca Monte dei Paschi’s $32 billion offer for Banco BPM and Gold Fields’ $25.7 billion bid for Northern Star Resources.

Rising energy costs have stoked inflation, prompting expectations that interest rates will remain elevated. The benchmark 10‑year U.S. Treasury yield rose to 5.34%, its highest level since 2002, marking the largest quarterly increase of this century.

“At the margins, higher yields make valuations a little tougher,” said John Collins, global head of M&A at Morgan Stanley. “The impact is hard to quantify, so I’m not ready to call a slowdown based on what we are seeing.”

Overall market still strong despite slowdown

For the year to date, global M&A activity remains robust, up 28% to $3.9 trillion – the highest level since 2001 – even though the number of deals fell 8%, a level not seen since 2020.

Carsten Woehrn, co‑head of M&A for Europe, the Middle East and Africa at Goldman Sachs, noted that corporations continue to pursue scale and access to new markets and technologies. He expects total deal value to surpass the 2021 peak if the current pace holds.

“Megadeals are continuing and we’ve seen significant activity since the summer,” Woehrn added. “Boards feel a greater urgency to pull the trigger on strategic deals.”

Technology sector fuels activity

Investments in technology remain a key driver, with strategic stake purchases accounting for roughly one‑quarter of global M&A so far this year. Companies such as Anthropic and OpenAI have raised tens of billions from investors, underscoring the sector’s appeal.

In the United States and Europe, dealmaking fell sharply, while Asia‑Pacific M&A rose 8% from the prior quarter to $242 billion and 36% year‑over‑year, highlighting regional divergence.

Cross‑border deals and private‑equity strength

Cross‑border transactions are up 32% compared with the same period last year. Charlie Bouckaert, global head of M&A at JPMorgan, said U.S. companies are increasingly looking at European acquisitions, taking advantage of a strong dollar, while European firms consider U.S. investments for higher growth potential.

This year also marks the strongest private‑equity‑backed dealmaking by value since records began in 1980, although the third quarter showed a slowdown relative to the same period in 2025.

IPO market and equity capital trends

New listings, especially in technology, have supplied fresh currency for acquisitions. SpaceX’s acquisition of AI‑coding startup Cursor followed its blockbuster Nasdaq debut, which pushed the company’s valuation above $2 trillion.

The June IPO of Elon Musk’s SpaceX contributed to $215 billion of initial public offerings (excluding SPACs) priced globally in the year to date – the highest level since 2021, despite fewer deals than the prior year.

Equity capital raised in the quarter fell 26% to $284 billion versus the second quarter, but was 39% higher than the third quarter of 2025, helped by offerings from SK Hynix and Intel.

Outlook

Some bankers caution that higher interest rates and a volatile data‑center ecosystem may delay future IPOs. Andreas Bernstorff, global head of equity capital markets at BNP Paribas, warned that rising diesel prices, rates, and potential political shifts are prompting investors to pause on certain technology and AI deals.

Nevertheless, industry leaders remain optimistic. Bouckaert expects “strong secular trends such as AI to drive activity, and we anticipate 2027 to be another robust year for M&A.”

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.