Local transactions buoyed by global demand

Growth expected, as investors seek stability

Australian M&A will increase, as global peers seek growth from stable markets and pursue unique technology, defence and resources targets. We expect accelerated demand for AI enabling infrastructure, cross border consolidation, and greater pressure on financial sponsors to deploy capital and monetise long-held assets.

The market is also bracing for regulatory complexity. As of 1 January, the ACCC’s mandatory notification and merger control regime is in effect. There is also continued scrutiny of transactions involving critical industries from the Foreign Investment Review Board.

Owners and founders are exiting large, mature businesses with limited succession options. As more owners retire and look to sell successful mid-market businesses, Australia is experiencing an inter-generational shift. This will create strategic opportunities for international and domestic buyers as well as Private Equity.

Mid-market transaction activity was up approximately 40% in 2025. This trend is expected to continue, driven by continued public to private transactions. Corporate mergers and acquisitions are also off to an energetic start, with BlueScope Steel Australia recently receiving an unsolicited takeover bid.

The success of Virgin’s IPO and solid post-IPO trading may also encourage sponsor-owned companies, with the market demanding well-structured, priced listings of quality businesses.

Private Credit continues to grow and is now the second largest class of open-ended funds, after Real Estate funds and overtaking Infrastructure funds.

With Private Equity and Private Credit dealmakers motivated to deploy capital and realise existing investments, we anticipate a broad range of transactions; from public to private sales, carve-outs, and leveraged buyouts. Exit transactions are likely to remain challenging. However, recapitalisations, continuation vehicles and share-based mergers can demonstrate value in 2026, if not completely realise liquidity.

Global uncertainty will define the year ahead

Strong market momentum in late 2025 and a record year for global M&A have driven surprisingly resilient corporate confidence. Global deal activity was up 40% and included several marquee US deals valued at over USD$5 billion. A resurgence in mega-mergers and undeployed private capital, combined with expectations for lower US interest rates, will drive continued momentum.

M&A activity in 2025 was helped by a 20% increase in private equity entries. The rebound in IPOs was also remarkable—up 54%—including six raises of over USD$1 billion and four initial valuations over USD$40 billion.

With over USD$2 trillion in undeployed capital, private equity players will place upward pressure on deal activity. New sources of flexible private capital across Sovereign Wealth, Infrastructure Funds and Family Offices will fuel activity and enable more complex deals with innovative financing structures.

Global private credit is set to exceed USD$2 trillion in Assets Under Management, continuing a structural expansion that includes broader asset backed finance and bespoke capital solutions. Larger deal sizes and rising participation from private wealth channels are expected, even as spread compression and increasing competition test underwriting discipline.

Despite improved availability of acquisition finance, uncertainty will remain a defining feature of 2026. Corporate acquirors will seek growth and global expansion, and dealmakers will need to respond to geopolitical manoeuvring as well as higher sovereign debt on currency and credit markets.

Key actions to take

• Prepare for deal complexity & heightened regulatory scrutiny – proactively assess the risks early and build strategies into your transaction timelines

• Unlock value upon exit – assess all available options and consider trade sales, strategic partnerships, recapitalisations or IPO options

• Engage early – build relationships with potential global buyers seeking stable markets and high quality assets