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February 2026 M&A total deal value showed a sharp rise on a year-over-year (YoY) basis, as companies focused on investing in larger deals amid increased board and regulatory confidence. Transactions of US$100million and above are up 224% in value and down 9% in volume, while US$1billion and above deals surged 319% in value and 38% in M&A activity. Among the deal drivers were better financing conditions and heightened artificial intelligence (AI) competition.
According to EY-Parthenon Chief Economist Gregory Daco, US economic activity is expected to remain broadly resilient in the near-term, supported by strong spending among higher-income households and continued AI-driven investment, even as consumption patterns remain uneven and geopolitical pressures persist. However, labor markets are likely to soften gradually as businesses continue to moderate hiring. In addition, the escalating conflict in the Middle East presents a clear downside risk to the outlook. Higher energy prices, tighter financial conditions, rising private-sector uncertainty and renewed supply chain pressures could weigh on growth while pushing inflation higher.
Daco estimates the energy shock could lift headline personal consumption expenditures (PCE) inflation by roughly 0.7 percentage points to around 3.5% in the spring, with core PCE near 3.2%, raising the year-end 2026 headline PCE forecast to 2.9%. He has also trimmed the 2026 GDP growth projection by 0.3 percentage points to 2.1%, with growth slowing to 1.6% year-over-year by Q4. In this environment, the Federal Reserve is expected to remain cautious, keeping the federal funds rate at 3.50%–3.75% at the March Federal Open Market Committee (FOMC) meeting and likely delivering only one 25-basis-point rate cut in 2026, if any, given inflation’s continued distance from the 2% target.
Deal value (US$100m+); deal volume (US$100m+)
Source: EY Insights analysis and Dealogic
On a monthly basis in February, US M&A activity showed deal value rising by 139% and volume declining by 15% as companies focused on going big vs. volume.
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Read moreRecent consolidation activity — particularly among large strategic acquirers — reflects a targeted intent to create larger, more efficient business operating platforms that can enhance competitive positioning, cost efficiency and improve cash-flow resilience. Companies are combining complementary assets, integrating overlapping capabilities and leveraging broader distribution footprints to capture cost and revenue synergies while reducing market fragmentation. This trend signals a move toward greater consolidation and transformation within existing ecosystems to enhance earnings stability through cross and up-selling opportunities and product and customer expansion.
PE acquisitions increased 9% in February from the prior month, including a continued focus on select public-to-private transactions. Recent take-private activity highlights how financial sponsors are pursuing public companies that exhibit strong underlying assets while facing structural constraints in executing long-term strategic plans within public markets. By transitioning these businesses to private ownership, PE sponsors can pursue accelerated operational improvements and cost efficiency while selectively repositioning operating platforms toward higher-growth adjacencies or more efficient commercial models. This pattern reflects a renewed conviction in PE’s ability to capture multiyear value-creation opportunities through focused governance and faster decision-making cycles.
Sectors that fueled this month’s deal activity
Source: EY Insights analysis and Dealogic
M&A activity in February witnessed a significant rise in deal value across sectors:
M&A activity posted exceptional growth in deal value (540% YoY), while volumes remained flat, highlighting continued concentration in fewer, larger transactions. Acquirers targeted assets positioned at the intersection of AI compute, autonomous mobility, FinTech infrastructure and semiconductor innovation. Mega raises in generative AI (GenAI) reinforced market confidence in enterprise adoption, while mobility investors continued to invest in autonomous ecosystems and semiconductor acquirers focused on expanding differentiated wireless connectivity capabilities.
The sector experienced robust growth in deal value (above 195% YoY) despite fewer transactions (24% YoY). Buyers showed renewed interest in opportunities that enhance cost competitiveness and support more efficient production footprints. Meanwhile, sellers focused on shedding noncore positions to reinforce balance sheet strength, underscoring a pragmatic approach to portfolio restructuring and reinforcing financial flexibility.
The sector saw renewed momentum in February, with deal value rising sharply (above 153% YoY) even as volumes contracted (-17% YoY). Transactions showcased an appetite for platform-level capabilities including in vivo chimeric antigen receptor T-cell (CAR-T), circular RNA (circaRNA) therapeutics and precision diagnostics.
The sector registered a significant surge (726% YoY) in deal value, driven by two mega transactions, while deal volumes held flat. Firms emphasized strengthening global reach, enhancing investment-platform breadth and integrating alternative asset offerings to capture growing client demand. Market participants appeared focused on building more resilient business models through diversified revenue streams, greater investment in private markets and strengthened advisory-centric offerings.
Deal value in the sector surged 196% YoY, while volumes expanded 200% as firms pursued scale, broadened funding profiles and strengthened competitive positioning. Companies focused on deepening operational integration, strengthening balance sheet structures and enhancing revenue diversity across commercial, retail and wealth-adjacent verticals.
M&A activity in 2026 is expected to broaden as momentum from 2025’s value-driven rebound carries forward. Dealmakers remain attentive to a more volatile geopolitical backdrop, which adds uncertainty to cross-border deal thesis, approvals and execution. Heightened Middle East tensions have slowed tanker traffic through the Strait of Hormuz and pushed energy prices sharply higher, raising the risk of sustained cost-push inflation that could unsettle deal financing and delay issuance windows.
However, stabilizing financing conditions, improving credit markets and stronger buyer confidence should support continued activity, particularly among large-cap acquirers seeking scale and AI-driven capabilities. At the same time, the amount of PE dry powder may accelerate monetization of long-held assets.
Energy logistics, select upstream or integrated and defense and cyber assets may see sustained bid interest. Meanwhile, broader pipelines remain active but more selective as boards wait for clearer signals on the duration and depth of energy market disruptions due to oil-price volatility and shipping bottlenecks. Overall, dealmaking is expected to persist as firms weigh strategic priorities against an increasingly complex geopolitical backdrop.
Karan Chowdhary, Assistant Director and Sagar Garg, Associate Manager, from Ernst & Young LLP (India) contributed to this article.
February’s M&A activity saw a sharp rise in deal value, with megadeals in the spotlight. Technology, healthcare and energy were the leading sectors for M&A. The M&A market benefited from improved financing, AI-driven investments and strategic consolidations. The outlook for 2026 remains optimistic, as large-cap acquirers pursue scale and AI capabilities. Large consolidation and transformation trends are rising despite the geopolitical volatility and inflation risks.
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