Conviction amidst uncertainty in M&A: Global sector heatmap 2026

The pattern recognition comes from understanding how M&A markets respond to different types of economic shocks. COVID represented a demand-side crisis: around the world, lock-down strategies delivered an unprecedented near 20% shock to consumer demand and business activity, temporarily closing down whole industries. In contrast, the war in Ukraine created a supply-side shock: energy, grain and commodity prices spiked, triggering a medium-term inflationary spike and subsequent interest rate increases.

Each crisis type produces a distinct M&A market signature. COVID initially paralyzed dealmaking as everyone waited to understand the economic impact. But once the policy response became clear, large deals bounced back aggressively. Historically low interest rates fueled a 2021 boom driven primarily by tech sector acquisitions and record private equity investment.

The war in Ukraine followed a different script. Initial price volatility caused immediate deal hesitation, but the sustained impact came from central bank responses to supply-driven inflation. As interest rates climbed to combat price pressures, deal activity was suppressed much longer off the back of valuations adjusting to the much higher cost of capital. The correlation between M&A volumes and interest rates proved far stronger than any relationship with underlying commodity prices.

But here’s where it gets really interesting: large deals recovered much faster than small ones in both scenarios. When financing costs matter, it seems that scale provides protection. Really transformational deals potentially absorb higher borrowing costs and still generate acceptable returns, larger deals have the potential to access a wider range of financing options, and large acquirers are often more diversified and hence more financeable.

Overall market activity remained bullish coming into 2026 — with Q1 ahead of the prior year, and at a run rate higher even than 2025 H2. High-tech targets saw deal values jump 35% in Q1 despite the emerging uncertainty. Finance sector targets surged 149%, suggesting continued ecosystem-building momentum even as other sectors showed hesitation.