Europe's M&A market is gaining momentum - with larger and more selective deals
A new analysis by Drooms and PitchBook shows: Europe's M&A and private equity market will start 2026 with significantly larger transactions and is gaining momentum again. However, the recovery is more selective and complex than in previous market cycles - with AI, digital sovereignty and add-on acquisitions as defining forces.
Europe's M&A and private equity market is in much better shape at the start of 2026. After several years of high interest rates, geopolitical uncertainties and cautious financing markets, there are increasing signs of a recovery. This is the conclusion of the new joint report «Executing in an Era of Market Complexities: European M&A and PE Trends and the Technology Imperative» by Drooms, a leading European platform for secure digital due diligence and virtual data rooms, and PitchBook, a leading provider of financial market data and analytics for the private capital and M&A industry.
The analysis of the most important European M&A and PE markets over the past ten years shows The average PE deal size in Europe so far in 2026 is €359.7 million - up from €289 million in 2025 as a whole. The increase in M&A transactions is even more pronounced: The average deal size currently reaches 546.3 million euros, almost twice as high as in the previous year. The main drivers are large technology, infrastructure and AI-related transactions.
Add-on acquisitions on the rise
At the same time, the report shows an increasing focus on lower-risk add-on acquisitions. The proportion of these smaller strategic acquisitions has risen to over 58% of all European PE transactions. While large deals dominate the headlines, many financial investors are focusing on gradual consolidation rather than broad market expansion.
«Market sentiment is improving, but investors remain extremely disciplined,» says Alexandre Grellier, co-founder and CEO of Drooms. «We are not currently seeing a widespread M&A boom, but a market in which capital is flowing very selectively into high-quality assets, strategic technologies and existing platforms.»
DACH region as a premium market
According to the report, the DACH region is increasingly developing into the premium segment of the European market. With 2,858 M&A transactions in 2025, it was once again one of the most active in Europe and ranked second behind the UK (4,545 M&A deals). Particularly striking: investors pay particularly high prices in the DACH region. With median M&A multiples of up to 13.5x EBITDA - particularly in technology-driven sectors and in software, industrial and AI-related business models - the region recorded the highest valuations of all European regions surveyed. The largest European PE exit transactions of the year include the EUR 7 billion takeover of Stada Arzneimittel by CapVest Partners.
In contrast to more globally integrated markets such as the UK or Ireland, the DACH region remains comparatively well anchored within European capital structures. This reduces the regulatory complexity of cross-border transactions and makes it more attractive for long-term investors.
«Beneath the surface of the big mega-deals is a market increasingly characterized by consolidation, buy-and-build strategies and operational complexity,» says Dorothy Chan, analyst at PitchBook and co-author of the report. «Many investors still have significant dry powder, but are investing much more selectively than during the low interest rate phase.»
AI and digital sovereignty as new deal factors
Another key finding: The European M&A market is increasingly characterized by topics such as AI infrastructure, data sovereignty and regulatory control. There is growing pressure to control critical data, cloud infrastructures and AI applications more closely within European jurisdictions. This development is not only influencing investment decisions, but also increasingly operational processes in dealmaking itself.
«Digital sovereignty is evolving from a regulatory issue to an operational factor in the transaction business,» explains Grellier. «Especially when it comes to sensitive due diligence processes and AI-supported workflows, financial investors and strategists are paying more attention to where data is processed, which platforms are used and how regulatory requirements can be met.»
Modern data room and deal platforms not only have to be efficient and AI-capable, but also meet the highest requirements in terms of data security, compliance and European data sovereignty. Despite growing market activity, the European deal market remains characterized by a field of tension: falling interest rates, high investment pressure and AI-driven growth fantasies are creating new momentum - while geopolitical uncertainties, financing costs and regulatory requirements remain key challenges.
Source: Drooms
