Cross-Border M&A Trends 2026: Regulatory Scrutiny, Deal Structuring, and Market Outlook
Cross-Border M&A Trends 2026: Regulatory Scrutiny, Deal Structuring, and Market Outlook
Global M&A activity continues to move forward, but with greater selectivity, heightened scrutiny, and a widening gap between markets. These themes emerged during a recent virtual meeting of WLG's Corporate Transactions Group, where Carlos Mello of TozziniFreire in Brazil, Kai Wallisch of CMS Germany, Steven Huang of Zhong Lun in China, Srinath Dasari of AZB & Partners in India, and Stacie Townsend of Gunster in Florida, USA shared perspectives from their respective markets.
Moderated by Victor Xercavins of Cuatrecasas in Spain, the discussion highlighted how macroeconomic conditions, geopolitical developments, and regulatory pressures are shaping dealmaking across jurisdictions—resulting in transactions that are taking longer, requiring more thoughtful structuring, and moving forward with a sharper focus on risk.
An active but uneven market
Across jurisdictions, the market remains active, but uneven. In the United States, Stacie Townsend of Gunster pointed to continued pressure on private equity sponsors to deploy and return capital, even as deals are approached more cautiously. Favorable macroeconomic conditions support activity, but geopolitical developments and weak consumer sentiment are shaping how transactions are assessed.
In China, deal flow has picked up, though growth is concentrated in sectors such as artificial intelligence, renewables, semiconductors, and electric vehicles. Steven Huang of Zhong Lun noted that domestic M&A has accelerated as limited IPO pathways make acquisitions an increasingly important exit route.
India reflects a similarly active, but more disciplined, environment. Srinath Dasari of AZB & Partners highlighted sustained interest in infrastructure, energy transition, and digital assets such as data centers, alongside greater complexity in execution. As he noted, "structure now drives execution as much as pricing does,” particularly where influence—not just ownership—can trigger regulatory scrutiny.
Europe presents a more cautious environment. Kai Wallisch of CMS Germany described slower-moving transactions, more intensive diligence, and a higher number of deals being reconsidered as risks emerge. In Brazil and the broader Latin American region, Carlos Mello of TozziniFreire noted a slower 2025, with activity largely limited to strategic transactions. There is, however, growing optimism for 2026, supported by investors seeking to diversify into new markets.
Structure is doing more work
Deal structure is playing a larger role in bridging uncertainty. As valuation gaps persist and risks remain difficult to quantify, parties are relying more heavily on mechanisms that allow transactions to proceed while allocating risk over time.
Earn-outs and other contingent pricing tools are more common where buyers and sellers diverge on future performance. Warranty and indemnity insurance is also more widely used, helping manage exposure and support cleaner exits. Due diligence is taking on greater importance and often begins earlier in the process. In cross-border deals, regulatory considerations are shaping strategy from the outset, reflecting the impact approvals and sector sensitivities can have on deal viability.
These dynamics are contributing to longer and less predictable timelines, with transactions pausing and restarting as parties reassess risk.
Regulatory scrutiny and geopolitical considerations now play a central role in cross-border M&A.
In Europe, foreign direct investment regimes have expanded significantly, with each country applying its own framework and requiring detailed, jurisdiction-specific analysis.
Opportunities remain, but are more targeted
Activity is concentrating in a narrower set of sectors, with capital flowing toward areas tied to long-term growth and strategic priorities.
Technology continues to lead, alongside digital infrastructure such as data centers. Energy transition and infrastructure assets remain resilient, attracting long-term investment, while natural resources continue to underpin deal activity in Latin America.
Defense, advanced manufacturing, and supply chain-related sectors are also gaining attention as companies respond to geopolitical shifts. Participants also noted continued activity in consolidation, carve-outs, and smaller transactions, as well as emerging distressed opportunities in certain regions.
Conclusion
The discussion underscored a global M&A market that is not slowing, but adjusting to a more complex operating environment. Transactions continue to move forward, but with greater discipline, deeper diligence, and more deliberate structuring. As cross-border activity continues, success will depend on navigating regulatory complexity, aligning expectations across jurisdictions, and responding to shifting market conditions in real time.
Author: Hanna Shea | World Law Group