KPMG noted that the German M&A market is beginning 2026 with confidence: companies, private equity firms, and family offices expect a noticeable upturn in transaction activity. After a year with fewer but larger deals – in the period from Q4 ’24 to Q3 ’25, the number of transactions declined by 12 percent, while the total volume rose by 30 percent – expectations are “growing that both the volume and number of deals will increase in 2026.”
As noted in the research report, many decision-makers assume that market conditions will now stabilize, postponed projects from 2025 will be “made up for, and larger strategic transactions will regain relevance.”
This is shown by the new “M&A Outlook 2026,” for which KPMG surveyed 200 top decision-makers from the M&A environment.
For 2026, companies expect an average of “13 percent more transactions on the buyer side and an 11 percent increase in transaction values (from an average of USD 822 million in 2025 to USD 913 million in 2026).”
On the seller side, the number of transactions will “increase by an average of 30 percent and the average value by 9 percent from USD 561 million to USD 612 million.”
In 2026, the M&A market will “clearly gain momentum.”
Many companies are “reviewing their business models and strategically realigning their portfolios.”
At the same time, many German SMEs are “arranging their succession and increasingly considering external solutions.”
Both factors are increasing the appetite “for transactions and creating more movement in the market.”
The upward trend is also confirmed by models “calculated specifically for the study, which KPMG developed in collaboration with the economic research institute Oxford Economics – albeit with a flatter dynamic” than in the survey:
Domestically, around 800 transactions with “a volume of USD 38.2 billion are expected in 2026.”
Foreign buyers in Germany also remain a stable factor: The model expects 623 deals with a “total volume of USD 42.6 billion in 2026. German buyers abroad will be more cautious in 2026, with 460 transactions and a volume of USD 16.7 billion.”
This is mainly due to global trade conflicts and increased financing costs. For all three deal types, the models forecast “a significant increase in activity and volume through 2028.”
Here, the number of deals completed will “be 2,853 (+45 percent compared to 2025) and the total volume will be USD 131.8 billion (+15 percent compared to 2025).”
Despite the expected upturn, there are factors that “could slow down the M&A market next year.”
Geopolitical risks in particular are causing uncertainty: “74 percent of companies see the Ukraine-Russia conflict as the most important influencing factor, followed by trade relations with China.”
On the buyer side, high financing costs are “the biggest obstacle (64 percent), while sellers predominantly view the inflationary environment as a burden (85 percent).”
In addition, differing views on company valuations “continue to hamper the willingness to transact on both sides.”
Government measures, on the other hand, play “a minor role: the majority do not expect any noticeable impetus from either the new federal government or the immediate investment program.”
The use of AI in the M&A process is “still in its infancy.”
Only 3 percent of companies use “agentic AI solutions, while 13 percent use generative AI in their operations.”
The majority are in transition: 35 percent “are piloting agentic AI applications or plan to use them within the next twelve months, while 31 percent are doing the same for generative AI.”
Private equity and family office investors “are slightly ahead, but are also predominantly in the early pilot phases.”
Seventy-four percent of respondents “cite poor data quality and availability as the biggest hurdle.”
AI is most widely used in due diligence: “77 percent of companies and 70 percent of PE firms use technologies to analyze large data rooms and documents.”
Respondents also see advantages for the post-closing phase: 83 percent expect AI to “improve the integration and separation process.”
At the same time, there is a growing expectation that AI itself “will become a driver of M&A activity: 77 percent are convinced that technological transformations – and AI investments in particular – will be a driver of transactions in the coming years.”
As noted in the update from KPMG:
“Nevertheless, skepticism remains high: 71 percent warn that the current AI hype is leading to unrealistic company valuations, and 67 percent see the complexity of integrating AI systems as a relevant obstacle to deal-making.“
The pressure to transform is significant according to the update from KPMG.
Those who do not use AI will “lose momentum and competitiveness.”
Due diligence in particular indicates that artificial intelligence speeds up processes and “improves the quality of data analysis.”
In the years ahead, this potential for efficiency “will increase exponentially once again,” according to Michael Buhl, Managing Partner, Head of Deal Advisory at a KPMG division.