Global mergers and acquisitions lost momentum in the third quarter of 2026 as rising borrowing costs, higher energy prices and growing uncertainty made major transactions more difficult to finance. Global M&A activity totaled $993 billion during the quarter, down 41% from the previous three months and marking the first quarter below $1 trillion since the second quarter of 2025.
Higher Rates Put Pressure on Deals
One of the biggest challenges facing dealmakers has been the sharp rise in borrowing costs. The benchmark 10-year U.S. Treasury yield climbed to 5.34%, its highest level since 2002, after recording its largest quarterly increase of this century.
Higher yields can make acquisitions more expensive to finance and can also complicate the valuations buyers are willing to place on potential targets.
“At the margins [higher yields] makes valuations sometimes a little tougher,” said John Collins, global head of M&A at Morgan Stanley. He added, “That said, the impact is hard to quantify, so I’m not ready to call a slowdown based on what we are seeing.”
A Slow Quarter in a Strong Year
Despite the sharp quarterly decline, 2026 remains a strong year for global dealmaking. Worldwide M&A activity has reached $3.9 trillion so far this year, up 28% and representing the highest total for this point in the year since 2001.
At the same time, the number of individual deals has fallen 8%, showing that much of the year’s activity has been concentrated in larger transactions.
“Corporates are still looking for scale or access to markets and technologies they are not in,” said Carsten Woehrn, Goldman Sachs’ co-head of M&A in Europe, the Middle East and Africa.
Large transactions have continued despite the tougher financing environment. Ten deals valued above $10 billion were announced during the third quarter, although that was the lowest quarterly number of megadeals since the fourth quarter of 2024.
AI Keeps Fueling Corporate Expansion
Technology remains one of the most important forces supporting global M&A. Strategic investments in technology companies have accounted for roughly one-quarter of worldwide M&A activity so far this year.
Artificial intelligence has played a particularly significant role as companies seek technology, infrastructure and scale to compete during the AI transition. Major AI companies including Anthropic and OpenAI raised tens of billions of dollars from investors earlier in the year.
“One of the drivers of activity is that being larger may help companies navigate transition in AI better,” Collins said.
New public listings have also provided companies with additional financial resources that can be used to acquire competitors and expand into new markets.
Asia-Pacific Moves Against the Trend
While dealmaking declined sharply in the United States and Europe during the third quarter, Asia-Pacific moved in the opposite direction.
M&A activity in the region reached $242 billion, an increase of 8% from the second quarter and 36% compared with the same period last year.
Private equity activity has also remained historically strong. By value, 2026 has produced the strongest year-to-date total for global private equity-backed deals since records began in 1980, even though activity slowed during the third quarter.
“We had an extraordinary Q2. Q3 is a normalization rather than an end of a cycle,” said Sarah Jones, global head of corporate at Clifford Chance. “Strategics are still working to pursue their goals.”
Cross-Border Deals Stay Strong
International acquisitions remain another major source of activity. Cross-border dealmaking is up 32% compared with the same period last year.
A strong U.S. dollar has encouraged some American companies to examine European acquisitions, while companies outside the United States continue looking at investments in the U.S. market for access to growth opportunities.
The trend suggests that companies remain willing to pursue strategic expansion despite higher financing costs and broader economic uncertainty.
IPO Market Feels the Pressure
The public markets have also been active in 2026. Global initial public offerings, excluding SPACs, have raised about $215 billion so far this year, the highest amount since 2021.
However, conditions weakened during the third quarter. Equity capital market transactions raised $284 billion during the period, down 26% from the second quarter, although still 39% higher than the third quarter of 2025.
Some technology and AI-related IPOs have recently been delayed as investors become more cautious about high interest rates and challenges surrounding the rapid expansion of data center infrastructure.
Dealmakers Look Toward 2027
The third-quarter decline shows that rising borrowing costs can quickly affect even a strong M&A market. Yet the broader picture remains significantly stronger than the quarterly numbers alone suggest.
With $3.9 trillion in worldwide M&A already announced this year, continued investment in artificial intelligence, cross-border acquisitions and strategic expansion could keep dealmakers active heading into 2027. The challenge will be balancing those opportunities against higher financing costs, inflation pressures and increasingly cautious investors.
