The K-shaped market: megadeals drive value, but the middle of the track stays put
Anyone who follows the Mergers & Acquisitions (M&A) market closely noticed something in 2025 that the numbers now confirm in 2026: the recovery has arrived, but it arrived erratic. 2025 was the busiest year ever recorded by deal value — close to US$4.5 trillion and something around 35% above 2024 —and, at the same time, a year in which the middle-market company and investor rarely felt that euphoria at their own table. The engine was not deal volume. It was deal size.
This duality is the common thread running through everything that matters for 2026. A recent Mergermarket study of senior M&A executives captures the sector's mood well: most expect more activity during the year, geopolitical unease weighs less than one might imagine, and the biggest brake has shifted from fear to price — the valuation mismatch between buyers and sellers. It is a confident yet
disciplined market. And, above all, it is a K-shaped market.
The 2025 numbers: the year of megadeals
The obligatory starting point is scale. Aggregate global deal value once again broke through the 2021 peak, with estimates converging on the US$4.5 trillion range. But the revealing detail lies in the composition: the number of transactions grew little — something like 5% on the more conservative reading — while value soared. In other words, roughly the same number of deals as always were closed, only with much larger checks (driven both globally and in Brazil by a few key investment sectors, such as financials, natural resources/mining, infrastructure and energy, and Technology/AI).
It was the year in which megadeals stopped being the exception — a movement that intensified at the end of 2025 and carried through the first half of 2026. Between January 2025 and May 2026, 74 deals above US$10 billion were announced, according to Bain, and transactions of US$1 billion or more accounted for more than half of all value transacted in 2025. The examples tell the story better than any average: Electronic Arts' record LBO (roughly US$55 billion, the largest leveraged buyout ever done), the acquisition of Aligned Data Centers by a consortium led by infrastructure managers and technology giants, McCormick's offer for Unilever's food business, and the move on Warner Bros. Discovery. The middle-market shrank — the count of smaller deals retreated, on some readings to its lowest level since 2016 — precisely the segment where most advisory activity is built. The practical message is uncomfortable: market growth concentrated where few operate.
Brazil focus: the domestic engine that stands apart from the region
If there is one market that deserves separate analysis, it is Brazil's — and not only for its size. Brazil closed 2025 as Latin America's most active market, with roughly 1,877 transactions (up approximately
7.6%) and reported value around R$313.5 billion (up about 15.8%), on TTR Data's reading. In dollars, market estimates place the Brazilian total near US$58 billion for the year. The message is the same as the world's, in a local accent: value grew faster than volume, a sign of a rising average ticket and of growing concentration in larger, more structured deals.
Brazil's key distinction relative to the rest of Latin America is its domestic depth. While the region outside Brazil is mostly driven by cross-border capital, the Brazilian market has a robust base of local
strategic buyers, domestic private equity sponsors, and institutional investors — which sustains deal flow even when foreign capital turns more selective. In 2025, domestic investors were present in more than 80% of announced transactions in the country. In practice, this means Brazil prices and finances in reais, and the foreign acquirer that treats the country as a simple dollar transaction tends to hit friction at the price and financing stage. Those who understand the local ecosystem of deals and funding have the advantage.
YTD 2026: record on the scoreboard, asterisk in the detail
The broad first-half 2026 figures confirm that the 2025 rebound was no passing gust. In the first five months of the year the global M&A market advanced 41%, on track for the second-best year in history
— a broad recovery, spread across markets and sectors, and anchored in strategic transformations. But, as in 2025, the detail matters: growth is in value, not volume, and deal count remains practically
stagnant.
The first quarter, in particular, came with a record headline — and an enormous asterisk. Depending on the base, global value ranged between US$861 billion and US$1.6 trillion, with readings of anywhere from 9% to more than 50% up over the same period in 2025. The problem is what underpins that figure: a single deal, SpaceX's acquisition of xAI for roughly US$250 billion, alone accounted for somewhere between 15% and 30% of the quarter's value.
What to expect: disciplined confidence, not euphoria
Putting the pieces together, the portrait of 2026 is not one of indiscriminate boom, but of disciplined confidence. Companies active in M&A, financial investors, and advisors are positive and expecting more activity — and, curiously, insulated when it comes to geopolitics: appetite has shown itself little affected by tension in the Middle East. After Covid, the war in Ukraine, and tariffs, the sector has learned to operate amid uncertainty. The real brake is more prosaic and harder to circumvent: the price mismatch— the main obstacle, ahead of geopolitics itself.
Hence the importance of the tools that have returned to the center of structuring work — earn-outs, partial rollovers, structured equity, representations and warranties insurance (R&W/W&I) with cost at
historic lows in some markets — and of private credit. Cash remains king.
Alexandre Pierantoni
Managing Director / Head of Brazil and LatAm Investment Banking
