Global mergers and acquisitions activity started the year strong. Despite geopolitical tensions and volatile markets, the total value of transactions in the first quarter surpassed $1.2 trillion, according to market data from LSEG. The figure represents a 26% increase in deal value compared with the same period last year, even though the number of transactions declined by 17%.
The divergence reflects a clear shift in the M&A landscape: fewer deals are being executed, but those that do take place are much larger.(Reuters)
Mega-Deals Take Center Stage
The first quarter was marked by a surge in extremely large transactions. Twenty-two deals worth more than $10 billion were announced, the highest quarterly figure on record. Technology companies and the rapidly expanding artificial intelligence ecosystem were central to this trend.
Four of the six largest transactions were connected to companies widely viewed as leaders in the AI race. A particularly striking example was OpenAI’s $110 billion funding round, which accounted for several of the largest transactions of the quarter. Another major deal involved Anthropic raising $30 billion, reflecting the growing scale of investment required to compete in the AI sector.
These deals also illustrate a structural shift in corporate transactions. Instead of traditional acquisitions, equity stake investments are becoming increasingly prominent, representing 29% of total M&A volume during the quarter.
Companies Adapt to Persistent Volatility
The surge in deal activity occurred against a backdrop of geopolitical instability. The escalation of the Middle East conflict following U.S. and Israeli strikes on Iran at the end of February has contributed to energy market volatility and large swings in company valuations.
Yet, unlike previous shocks, the turbulence has not halted dealmaking. Instead, companies appear to be adjusting to the reality that uncertainty may be a permanent feature of the global economy.
Executives and investment bankers increasingly describe volatility as part of the operating environment rather than a temporary disruption. As a result, corporations are continuing to pursue strategic transactions instead of postponing decisions until markets stabilize.
This mindset contrasts with the reaction to the global trade tensions triggered by the United States’ “Liberation Day” trade policy shift last year, which temporarily slowed dealmaking across multiple sectors.
Strategic Discipline Becomes More Important
Although M&A activity remains robust, boards and investors are approaching deals with greater caution. Rapid fluctuations in energy prices and equity markets have forced companies to focus more carefully on the strategic logic behind transactions.
Investment bankers suggest that long-term strategic objectives—such as gaining access to new technologies, expanding global market presence, or strengthening supply chains—remain the primary drivers of major deals. Short-term market volatility is considered less decisive unless it persists long enough to materially affect inflation, interest rates, or growth forecasts.
Cross-Border Transactions Accelerate
Another major feature of the first quarter was a strong increase in cross-border mergers and acquisitions. These transactions rose 47% year-on-year to $454.7 billion, the highest first-quarter level in more than two decades.
The United States continued to be the most attractive destination for international investment, accounting for more than half of all cross-border transactions so far this year. The United Kingdom ranked second with roughly 11.5% of activity.
Large multinational deals illustrate this trend. For example:
- U.S.-based McCormick announced plans to acquire Unilever’s UK food business, creating a global food company valued at around $65 billion.
- French energy company Engie agreed to purchase UK Power Networks in a transaction valued at $21.3 billion.
For many European firms facing slower domestic growth, expanding into the United States offers several advantages: stronger economic growth, higher corporate valuations, and a local presence that can reduce exposure to U.S. tariffs.
Regional Differences in Activity
While dealmaking has been strong in North America and Europe, the picture is more mixed in other regions.
Asia-Pacific M&A activity declined sharply, falling nearly 32% to $142 billion during the quarter. Japan was a notable exception, where transaction values increased by about 16% to $37 billion.
Japanese corporations appear increasingly focused on improving capital efficiency, leading to a wave of divestitures of legacy assets, particularly in the automotive and diversified industrial sectors.
Outlook: Momentum Could Continue
Despite geopolitical tensions and economic uncertainty, corporate appetite for strategic transactions remains strong. Many investment banks report deal pipelines that are significantly larger than a year ago.
If market volatility moderates, industry participants expect activity to accelerate further, potentially mirroring the surge in deals seen in the second half of last year.
For now, the first quarter suggests a new pattern for global M&A: larger, more strategic deals driven by technology shifts and cross-border expansion, executed in an environment where volatility is increasingly accepted as the norm.
