Megadeals are surging in 2026, but small and mid-market transaction volume remains well below historical norms
Global merger and acquisition activity strengthened through the first eight months of 2026, but a new report from Boston Consulting Group (BCG) makes clear that the recovery is far more selective than headline figures suggest, with gains concentrated in a handful of massive transactions while activity across the broader market remains well below historical norms.
Aggregate deal value globally rose 15% year over year and exceeded the ten-year average by 11%, according to BCG's M&A Report 2026. The driving force, however, is a surge in megadeals - transactions valued at $10 billion or more - while lower-tier deal volume has yet to recover.
Megadeals are back - but the middle is missing
The number of megadeals globally climbed to 37 in the first eight months of 2026, up from 24 during the same period a year earlier and above the 2021 record of 32. Beneath that surge, the picture is more restrained. Transactions valued below $1 billion remain below longer-term norms even before adjusting for inflation - which would make the shortfall more pronounced.
BCG's proprietary M&A Sentiment Index, which combines fundamental market drivers with AI-based analysis of corporate communications, rose to 83 in the first eight months of 2026, up from 79 at the start of the year, but remains well below its long-term average of 100.
The improvement is uneven across sectors. Sentiment was strongest in financial institutions and real estate, which registered 108 on the index - the only sector running above the long-term average - followed by health care at 100 and energy at 96. Industrials, consumer, and technology lagged significantly, at 66, 64, and 52 respectively.
Financial services: the sector to watch
For Canadian wealth managers, the financial services data is the most immediately relevant. The sector's M&A Sentiment Index reading of 108 places it well above every other industry globally, and the deal flow bears that out - particularly in the asset and wealth management segment.
In the United Kingdom, Nuveen's proposed $12.9 billion acquisition of Schroders was the largest wealth management transaction announced through July 2026, contributing to a broader surge that pushed UK financial institutions and real estate deal value to $67.4 billion - more than double the $31.5 billion recorded over the same period in 2025.
While that reflects a different market, it signals the scale of consolidation appetite among global asset managers, a trend that has clear read-across for Canadian firms evaluating their own strategic options.
Closer to home, the Canadian M&A market is experiencing its own consolidation wave in financial services. PwC Canada's 2026 M&A Outlook, released December 2025, projected approximately $3 trillion in expected wealth transfer as a primary driver of deal activity in the wealth management sector, fuelling transactions among aging advisory principals and creating a deeper bench of motivated sellers.
Domestic deals - Canadian buyers acquiring Canadian targets - account for approximately half of all Canadian M&A activity and are expected to continue anchoring the market through 2026, according to PwC Canada.
As Wealth Professional has reported, deals such as iA Financial Group's acquisition of Richardson Wealth and OneDigital's purchase of PWL Capital illustrate how platforms are bulking up and blurring the lines between retirement, benefits, and wealth management. PwC Canada expects that consolidation to continue and possibly accelerate as acquirers from both core and adjacent sectors pursue scale and capabilities, and as banks and insurers selectively buy distribution.
That pattern mirrors BCG's global findings almost precisely: capital and strategic appetite are present, but the recovery is concentrating at the top of the market. Firms with scale command premium valuations; those without it are increasingly likely to become targets rather than acquirers.
What is holding the broader recovery back
BCG frames deal executability around five tests: asset readiness, market-clearing economics, resilient financing, organisational capacity, and regulatory clearance. Asset availability and economics are currently the most binding constraints on a broader recovery; financing and organisational capacity are less restricted at the market level, though they still shape individual deals.
"Capital and strategic appetite are available," said Jens Kengelbach, global leader of Mergers & Acquisitions at BCG and a co-author of the report, based in Munich. "The bottleneck has shifted to execution: finding transaction-ready assets, bridging valuation gaps, and clearing the operational and regulatory hurdles required to close. Until more deals pass those tests, the recovery will remain concentrated at the top of the market."
Regulatory risk has not diminished but it has shifted. Conventional antitrust enforcement may be less restrictive in parts of the market, but national-security screening, foreign-investment controls, and foreign-subsidy reviews are increasingly influencing deal terms, timing, and economics. In Canada, the Investment Canada Act review process has become a more active factor in cross-border transactions, particularly in sectors designated as sensitive.
BCG also points to portfolio rotation - divestitures, carve-outs, and private equity exits - as a potential catalyst for the next leg of activity. A greater supply of prepared assets could free up capital for higher-priority businesses and draw mid-market buyers back into the transaction pipeline.
Regional split: Europe confident, North America cautious
The BCG Sentiment Index reveals a striking gap between regions. European dealmaker sentiment stands at 100 - matching the long-term average - well ahead of the Americas reading of 73 and the global benchmark of 83. That relative strength reflects Europe's comparative stability in an uncertain global environment.
North America, by contrast, tells a more complicated story. In the United States, deal value rose 25% in the first seven months of 2026 compared with the same period last year, outpacing the global increase. But deal volume fell 26% — a steeper decline than the 16% global drop — and transaction activity across the broader US market dropped to its lowest level since the pandemic-disrupted first half of 2020. Large transactions are proceeding; mid-market deals are stalling. Canada, while not broken out separately in BCG's regional data, sits within the Americas aggregate and faces similar dynamics: motivated sellers, available capital, but a valuation gap that is keeping many potential deals off the table.
AI is both a catalyst and a complication
BCG identifies artificial intelligence as playing a dual role in the current cycle. AI is encouraging new investment and deal activity in parts of the market — but also adding uncertainty around the durability of business models, revenue pools, and competitive positioning in others, making some assets harder to value and transact.
"AI is doing two things to this market at once," said Daniel Friedman, global leader of Transactions & Integrations at BCG, based in Los Angeles. "It's a reason to do more deals and a reason some deals are harder to close. The companies that get furthest ahead are likely to be the ones that have actually worked out which is true for the asset in front of them."
A sharp correction in software company valuations earlier in 2026, together with a pullback in private equity software deal activity, is an early sign of that dynamic. For Canadian wealth managers advising clients with technology equity holdings or private market exposure, the distinction - which companies are deal catalysts and which are deal casualties in an AI-disrupted landscape is increasingly material to portfolio strategy.
BCG also points to alternative deal structures as a practical response to persistent uncertainty. Minority investments, joint ventures, staged acquisitions, earnouts, and rollover equity can help parties share valuation, technology, control, and regulatory risk. More dealmakers - especially in the AI ecosystem - are using those structures to complete transactions that would otherwise stall on valuation disagreements, a trend that Canadian advisors working with owner-managed businesses may find increasingly relevant to succession conversations.
For wealth managers and financial advisors tracking the deal environment - whether for portfolio positioning, client business advisory work, or practice M&A decisions of their own - the BCG data points to a market that rewards preparation and penalises assumption. Capital is available. Execution is the constraint. And in both global and Canadian markets, the firms that move first with transaction-ready assets and clear strategic rationale are the ones closing deals.
