Technology M&A 2026

Overview

Welcome to the fifth edition of Chambers’ Technology M&A Guide.

Continuing with the momentum that has been built over the last four editions, we are pleased to broaden the scope of this year’s guide and, along with welcoming back our previous contributors, we extend a heartfelt welcome to our new participants from various countries.

In the final stretch of 2025, the US M&A landscape continues to be impacted by macroeconomic policies and geopolitical headwinds. Evolving tariff policies, international trade tensions, uncertainty in inflation and unemployment forecasts, and the ongoing tensions in the Middle East and the war in Ukraine have affected the wider market and dampened investor confidence. Despite these uncertainties, technology M&A remains an important priority for many investors and companies heading into 2026.

Artificial intelligence (AI) remains a key driver in tech sector deal making as companies continue to pursue strategic imperatives around AI, including high-performance computing, advanced networking, and scalable power infrastructure. Executives that previously considered AI to be a promising technology for their day-to-day operations are now seeing it deliver measurable results across all aspects of their businesses. As a result, businesses across various sectors and jurisdictions are planning and considering options to increase their AI investment. Lloyds Bank’s latest published annual Financial Institutions Sentiment Survey highlighted that more than half of financial institutions plan to increase their AI investment in the year ahead.

Other key drivers of tech M&A include the pursuit of greater supply chain resilience and intensifying competition, both of which are encouraging companies to expand their market presence. Businesses are pursuing cross-border mergers, acquisitions and investments at record levels to access new markets, diverse talent pools and strategic technologies. These businesses are increasingly willing to navigate regulatory complexity to leverage global opportunities for innovation and growth – and given the pace of technological innovation, the pressure to move quickly has never been greater.

Tech M&A Value and Volume

Tech remains the most targeted sector for M&A by value and volume, characterised by an upward trend in global deal activity and investment through 2025. According to Mergermarket’s recently published M&A Highlights for Q3 2025, tech M&A led all sectors with approximately USD809 billion worth of deals completed as of Q3 2025, which accounted for 24% of global M&A volume.

Deal value rebounded strongly with the technology sector leading all others on value. Mega-deals (over USD1 billion) have surged, reflecting a market trend towards fewer, larger and more strategic transactions prioritising high-value acquisitions, particularly in AI infrastructure, cybersecurity and cloud services. While the USA continues to have a dominant lead in deal value – led by strategic buyers that are looking to create vertically integrated businesses through acquisitions – the surge in tech megadeals has been reflected globally, as seen in several landmark transactions announced in 2025. Some examples of recent tech megadeals in 2025 include:

• Google’s USD32 billion bid for Wiz in March;
• Japanese conglomerate Nippon Telegraph & Telephone (NTT) Corp’s  USD16.5 billion acquisition of the remaining shares in IT services provider NTT Data Group Corp in June;
• Meta’s acquisition of 49% of Scale AI for USD14.3 billion in June;
• Palo Alto Networks’ USD24.5 billion acquisition of Israel’s CyberArk Software in July; and
• KKR’s USD6.5 billion acquisition of UK-based Spectris PLC, which is expected to be completed in Q1 2026.

The surge in tech M&A is also extending into adjacent industries, including the utilities and energy sector. For example, the heightened demand for AI data centres is driving a corresponding need for greater electricity supply. This trend is reflected in a 38% year-on-year increase in utilities and energy M&A activity, according to Mergermarket. Notable transactions illustrating this dynamic include Constellation Energy’s USD29.4 billion acquisition of Calpine in January, as well as Baker Hughes’ USD13.8 billion acquisition of Chart Industries announced in July.

Private equity and venture capital firms are also deploying record dry powder globally in targeting scalable tech platforms, with firms preferring M&A as a route to acquiring global talent and infrastructure in the tech sector.

Deal count, however, remains subdued due to valuation pressures, continued economic and geopolitical uncertainty, and regulatory scrutiny. Buyers are now choosing to focus on quality over quantity, and markets are more disciplined and value-oriented overall. 

Looking forward to 2026, tech M&A activity will likely be fuelled by strong corporate balance sheets, plenty of private equity dry powder, and a strategic push to “buy rather than build” new tech, enabling companies to quickly enhance their capabilities and stay ahead in a rapidly evolving sector. The technology M&A pipeline remains strong, supported by improving financing conditions and expectations of moderating inflation.

The AI Revolution Continues

AI continues to dominate tech investment, attracting 50% of total global investment in the first half of 2025, with funding levels close to the full-year total for 2024. Rapid enterprise adoption and scaling of generative AI together with developments in agentic AI are driving the latest wave of digital transformation. Gartner expects global AI spending to reach close to USD1.5 trillion in 2025 and to exceed USD2 trillion in 2026 as demand fuels digital infrastructure investment. For example, in Italy, domestic and international strategic buyers are increasingly acquiring technology companies to accelerate digital transformation, AI capabilities, cloud infrastructure and cybersecurity competencies, with consolidation allowing companies to achieve operational efficiencies in fintech, SaaS and AI-enabled platforms.

Three years after OpenAI’s release of ChatGPT to consumers, enterprises across all industries are now embedding and scaling generative AI, which has reached its “impact moment” of delivering measurable benefits for businesses. AI models are also being integrated into agentic workflows, involving teams of “digital workers” working autonomously, enhancing decision-making and improving regulatory responsiveness well beyond simple responses to instructions. Agentic AI is reshaping how businesses orchestrate workflows, reduce operational friction and accelerate value creation.

AI’s outsized impact is evident, as it accounts for many of the industry’s largest transactions. Leading companies such as OpenAI (raising USD40 billion), Anthropic (raising USD13 billion), xAI (raising USD10 billion) and CoreWeave (with its USD1.5 billion IPO) are attracting record-level funding. Investment in AI will likely continue to attract the highest levels of investment, with investments ranging from small language models, robotics and agentic AI to AI-driven solutions for industries such as defence tech, health and biotech. AI is not just a vertical – it is a horizontal enabler across all tech subsectors.

Demand for Digital Infrastructure

The surge in AI adoption across sectors has reshaped the digital infrastructure landscape supporting the technology. Demand for data centres has steadily grown and is expected to triple within the next five years. This has prompted a race to secure consistent carbon-neutral power sources to meet the growing energy demands.

As mentioned, tech firms have been ramping up AI spending, forecasted to reach USD1 trillion on AI alone in the coming years and in turn benefiting sectors providing vital infrastructure such as chipmakers, power utilities and cloud service providers. For example, UK big tech firms have been projected to spend over USD300 billion on AI infrastructure in 2025, demonstrating the evolution of AI from a single subsector to the foundational infrastructure underpinning the country’s technology ecosystem. Across jurisdictions, companies are investing in large-scale projects, such as:

• the USD500 billion Stargate project supported by OpenAI, Microsoft, Oracle, SoftBank and MGX to scale up US infrastructure;
• the USD100 billion strategic partnership between OpenAI and Nvidia to build and deploy at least 10 gigawatts of AI data centres;
• the USD5 billion collaboration between Nvidia and Intel to jointly develop multiple generations of custom data centre and PC products; and
• the plan to invest EUR109 billion into AI infrastructure in France, announced by President Macron in February 2025 at the AI Action Summit in Paris.

The global outpouring of capex into AI and data centre buildouts is mirrored in South-East Asia, where Thailand is attracting sizeable greenfield development as well as institutional investment in digital infrastructure. In Japan, rapid conversion capacity scaling through strategic asset acquisitions has been the response to escalating construction costs and extended development timelines.

As organisations work towards expanding their digital infrastructure, the challenges they encounter vary significantly by region and jurisdiction. Companies need to carefully consider multiple factors including data protection regulation, foreign investment controls, local planning restrictions, cybersecurity and the practical need for stable electricity connectivity for certain digital infrastructure, particularly for projects concerning data centres and telecommunications towers.

New Urgency for Defence Tech

Rising global tensions and ongoing conflicts have brought new urgency to enhancing and modernising defence capabilities. This has prompted a step change in government funding, and accelerated investment in defence technology start-ups that are developing technologies such as AI-powered drones, autonomous vehicles and advanced software-enabled weapon systems.

For example, the US government has made a strategic pivot towards more agile, adaptable and technology-driven combat solutions. It has significantly increased its budget for unmanned systems and counter-drone technology, allocating approximately USD6 billion for the 2026 fiscal year. Venture capital and private equity investment in defence tech has also reached record highs, which in the USA has far exceeded state spending, amounting to USD38 billion in the first half of 2025. The EU is also prioritising investments in defence tech; it announced project ReArm Europe and Readiness 2030 in March 2025, which marks the first co-ordinated EU initiative to significantly boost defence expenditure. The programme aims to increase the EU’s defence spending by an estimated EUR800 billion by April 2029. The majority (over 60%) of the spending is dedicated to AI, surveillance, reconnaissance and advanced analytics.

Space technologies have also attracted growing interest across numerous jurisdictions due to the strategic significance of space in national defence strategies. This encompasses launch vehicle technologies, communication networks, digital infrastructure, and other essential systems required for effective space operations. Relatedly, the development of radiation-resistant microchips in the UK for deployment in higher orbits is revolutionising space technology.

As interest in defence tech grows, investment in dual-use technologies serving both commercial and national customers is expected to accelerate. Countries such as the Netherlands are seeing strong momentum in the collaboration between EU governments and institutional investors to target investments in defence and dual-use technology. However, the sector presents complex legal challenges, especially as AI becomes more embedded in military systems. Key issues include compliance with international humanitarian law, human oversight of autonomous systems, transparency in classified technologies, and strict export controls and national security reviews. While ethical governance frameworks are emerging globally, binding legal standards remain fragmented and under development.

Complex and Fragmenting Global Regulatory Landscape

As deal making in the technology industry has become increasingly more global, and with technology often being viewed as a strategic, defence and national security priority, regulators in different jurisdictions have been tightening requirements in their markets. Antitrust authorities have been challenging technology transactions more aggressively (even challenging perceived dominance of tech companies in a particular market), while foreign direct investment (FDI) regulations have been tightened in different parts of the world to protect nascent technologies from being acquired by foreign buyers.

For example, foreign investment regulators have been scrutinising the scope for data centres to provide hostile actors access to sensitive data or control of the data centre to cause disruption or otherwise compromise national security interests. Specifically, the USA has strengthened its FDI regulations and introduced mandatory filings, with a specific focus on the technology industry. France, Germany and the UK have adopted stricter requirements for acquisitions of tech companies in their jurisdictions, and the EU has adopted co-ordination regulations across the region through its AI Act for sharing information and collaborating in FDI enforcement.

The US antitrust regulatory landscape has evolved significantly. After more than two years of drafting, and following a public consultation period, final changes to the HSR filing form applicable to reportable transactions became effective in February 2025. These changes significantly increase the burden of disclosure requirements on filing parties, including more expansive document productions, narratives on market dynamics, and information on the board membership of the acquiring person’s officers and directors.

Merger control in 2025 is a central factor in US tech M&A, with regulators balancing competition concerns against innovation and investment. Deal makers must be proactive in addressing antitrust risks, structuring deals to withstand scrutiny and planning for potential regulatory delays. The environment is more predictable for smaller deals, though large-scale tech consolidation remains under the microscope.

Given the increasing cyber-threat landscape, governments are also focusing on cybersecurity for critical infrastructure. In the EU, there has been a notable increase in cyber-specific regulation, and while the current US administration has signalled a pro-growth deregulatory stance, cybersecurity regulation has still tightened at the state level and within key federal frameworks. In 2026, we expect to see further developments in cyber-specific regulation in the USA and the EU in particular.

Trends in Tech Exits

Technology companies that decide to continue their journey as independent players on their path to profitability can choose from a variety of forms of public market exits:

• an IPO;
• a direct listing; or
• a de-SPAC transaction (ie, a merger with a special purpose acquisition company – although de-SPACs have significantly declined as an option for a number of reasons).

However, M&A has remained the dominant exit route for tech companies in 2025 given that it generally offers faster liquidity and fewer regulatory hurdles than public market exits.

Structured secondary sales have been increasingly used to provide liquidity for early investors and employees, and hybrid exit models – including minority stake investments and licensing-based acquihires – are gaining traction as flexible alternatives to full acquisitions.

Private equity as an exit route has also become a dominant alternative to IPOs, particularly for later-stage companies seeking liquidity without the volatility of public markets. Private equity firms are targeting tech companies with recurring revenue models, such as Software as a Service (SaaS) and infrastructure platforms, and are active in carve-outs, take-privates and consolidation plays across the sector. Mergermarket reports that, as of Q3 2025, buyouts in North America totalled USD375 billion (up 51% year-over-year), led by the USD56.6 billion Electronic Arts deal by an investor consortium comprised of the Public Investment Fund (PIF), Silver Lake and Affinity Partners, followed by Air Lease’s USD27.4 billion buyout by Sumitomo, Apollo and Brookfield in September.

Looking ahead, AI-driven consolidation and creative deal structures will continue to shape the tech exit landscape, with M&A and secondary markets likely to remain the preferred paths to liquidity.

IPOs Rebounding

Overall, the IPO market in 2025 has rebounded sharply, with activity up nearly 80% compared to the same period in 2024, and with 250 tech IPOs on the US stock market as of September 2025.

Technology companies have played a central role – especially those in AI, fintech and cloud services. High-growth sectors such as AI and cloud services, highlighted by CoreWeave’s USD1.5 billion listing, alongside crypto and fintech companies such as eToro (USD620 million), Gemini (USD3.3 billion), Circle (USD1.1 billion) and Klarna (USD1.37 billion), have been at the forefront of market activity. Notably, both CoreWeave and Circle demonstrated robust post-IPO performances.

Many tech firms – especially those without a clear path to profitability – remain cautious, with some delaying IPO plans due to lingering market volatility and regulatory uncertainty. However, the IPO window has clearly reopened, with issuers adopting a more disciplined approach that emphasises valuation, sustainability and investor readiness.

The market continues to mature, with investors showing a clear preference for businesses that display profitability, resilience and a commitment to innovation, prioritising those with robust fundamentals, clear AI strategies and scalable business models that favour growth. Looking ahead, the pipeline is robust. Renaissance Capital forecasts 40 to 60 more IPOs by year-end 2025, with a backlog of profitable tech unicorns including Revolut, Canva, Space X and Stripe.

SPACs Making a Comeback

Using a special purpose acquisition company (SPAC) investment vehicle to go public, rather than going through a traditional IPO, typically provides a faster and more flexible route to public markets for tech companies looking to raise capital quickly to fund growth. The valuation is negotiated privately between the SPAC and the target company (and not determined by market demand during an IPO), which can benefit high-growth tech companies with limited profitability, and which may be undervalued in a traditional IPO.

Following waning enthusiasm since 2022, SPACs saw a strong resurgence in 2025, raising USD11 billion and making up 65% of US IPO volume by mid-year. This comeback was fuelled by political and market shifts – especially a more business-friendly Securities and Exchange Commission under the Trump administration, which eased enforcement of SPAC regulations. As a result, SPACs have once again become an attractive and flexible alternative route to public markets compared to traditional IPOs, despite ongoing concerns about their long-term viability.

Spin-Offs

In 2025, spin-offs gained momentum among tech companies as a strategic way to streamline operations and unlock shareholder value. Firms are separating high-growth units, especially in AI and semiconductors, from legacy businesses to improve focus and capital efficiency, often under pressure from activist investors.

Heading into 2026, the trend is expected to continue, with a strong pipeline of announced spin-offs from major players such as Honeywell and Comcast. This reflects a broader shift towards agile, modular corporate structures, and data shows that spin-offs are outperforming broader market indices. While not all succeed, spin-offs remain a favoured tool for tech firms navigating competitive and financial pressures.

Using This Guide

As cross-border technology deals are often very complex and involve different legal regimes and cultures, we have organised this guide by country and asked each country’s contributor to address the same set of issues that a technology company going through its lifespan faces – from incorporation, early funding and venture capital rounds to the ultimate goal of being a public company or being sold at a high premium. We hope that you find this guide useful as you consider global deals.