Global M&A Deal Flow Slows in Q3 as Higher Borrowing Costs Bite
M&A activity fell to $993 billion in the third quarter, a 41% drop from the previous quarter, marking the first sub-$1 trillion quarter since Q2 2025. Rising yields and inflation-driven rate expectations are tightening valuations.
In Q3, worldwide merger and acquisition activity contracted to $993 billion, a 41% decline from the prior quarter and the first time the total fell below $1 trillion since mid-2025. The quarter saw only ten megadeals—transactions over $10 billion—highlighted by Banca Monte dei Paschi's $32 billion bid for Banco BPM and Gold Fields' $25.7 billion approach to Northern Star Resources, the lowest megadeal count since Q4 2024.
Analysts attribute the slowdown to rising borrowing costs, with the 10-year U.S. Treasury yield reaching 5.34%, its highest level since 2002, tightening valuations across sectors. Nonetheless, AI-driven growth and robust tech IPOs have buoyed overall deal value, keeping year-to-date M&A at $3.9 trillion, a 28% increase and the highest since 2001, even as the number of deals fell 8%. Regional trends show Asia-Pacific M&A rising 8% quarter-over-quarter, while U.S. and European activity declined sharply. Cross-border deals remain strong, up 32% year-on-year, as firms seek scale and access to new markets and technologies.
Why it matters
The dip signals that higher interest rates are beginning to curb large corporate deals, affecting global investment flows.
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