Editor’s note: This article is part of our 2026 forecast coverage. See our IPO market outlook here.
For years, industry observers have predicted an uptick in startup M&A activity, in part due to the limited number of companies going public. As the IPO dam finally broke in 2025, we didn’t see a huge surge in M&A dealmaking, but we did see a large spike in the known value of M&A deals.
Globally, in 2025 so far, there have been around 2,300 M&A deals involving venture-backed companies with a collective known deal value of more than $214 billion, per Crunchbase data. (It must be noted that most of the reported M&A deals do not have amounts, so the dollar amount is based only on the deals in which a value was provided.)
Interestingly, deal count was only up slightly, signaling much larger deal sizes. The dollar amount is up from a known value of $112 billion in 2024, for an impressive 91% increase.
The trend was similar in the United States, which dominated M&A activity, comprising about 73% of all transaction values and 56% of transactions alone, globally.
There was a known value of $157 billion across nearly 1,300 deals, compared with a known $79 billion across about 1,100 transactions in the U.S. in 2024. Around 37 of those deals were valued at $1 billion or more, per Crunchbase data.
Anuj Bahal, technology, media and telecoms deal advisory and strategy leader for KPMG US, is not surprised by the uptick in M&A deal volume and dollars.
“A healthy IPO market tends to increase M&A activity rather than reduce it,” he told Crunchbase News. “Many companies pursue dual-track strategies, simultaneously preparing for an IPO while exploring M&A, which gives them greater flexibility and leverage in negotiations. The threat of a public offering can be used as a bargaining chip to drive up a startup’s sale price.”
On top of that, he points out, a strong IPO market creates a new wave of cash-rich public companies that “immediately look to acquisitions to accelerate their growth,” ultimately stimulating M&A demand.
Larger deals tick up
Google’s $32 billion purchase of cloud security unicorn Wiz marked the largest acquisition of a private, venture-backed U.S. company, not just this year so far, but ever. The next-closest deal historically, per Crunchbase data, was Meta’s 2014 acquisition of WhatsApp for $19 billion. Still, that deal alone wasn’t responsible for the large increase in value of M&A transactions this year.
The next-closest deal in 2025 was Naver Financial Corp.’s $10.3 billion buy of South Korea fintech Dunamu. After that came Thermo Fisher Scientific’s $8.87 billion acquisition of Clario.
In fact, M&A exit numbers this year are the highest ever for unicorn companies, with 36 deals in 2025 totaling $67 billion in value.
Other large transactions included:
Strategic plays and a flurry of acqui-hires
Lukas Hoebarth, EY-Parthenon Americas technology sector leader, believes that strategic plays drove 2025’s M&A surge far more than distressed sales.
“Corporations are writing big checks for AI, cybersecurity, data acquisitions, and massive tech and talent deals,” he said. “These tech and talent deals used to be worth tens of millions, and now we are in the billions.”
Indeed, fear of missing out appeared to be a driving factor in a lot of M&A activity, especially when it came to AI. The sector also drove a flurry of acqui-hires.
“On the one hand, big corporates are snapping up seed/Series A startups for talent and tech — we can call that the AI acqui-hire trend. Many teams with fewer than 100 employees have landed $100 million-plus exits,” Hoebarth said. “On the other hand, a cohort of 3- to 6-year-old unicorns that stalled on IPO plans is finally selling.”
Looking ahead to 2026, he predicts that acquirers will likely increasingly focus on earlier plays — scooping up emerging tech before it scales, especially in high-growth sectors like AI and cybersecurity.
Lindsey S. Mignano, co-founder of SSM and a corporate attorney for startups and small businesses, agrees that more acquisitions are happening at seed and Series A, but believes that more value is being transacted at later stages.
“Acquirers are buying at an earlier stage to speed up to capability rather than build internally, as hiring the same team individually is slower and riskier,” she noted. “Seed and Series A founders are more willing to sell in light of the current financing environment and the fact that there is less stigma around a really early exit at present.”
Unless the financing environment picks up evenly for early-stage seed and Series A companies, she expects this trend to continue.
AI vs. everything else
Not only did the ultra-competitive environment, especially in the AI and cybersecurity industries, drive more acqui-hires, but talent also played a larger role than ever in determining transaction value.
Itay Sagie, owner of Israel-based Sagie Capital Advisors, believes that in 2025, pricing has effectively been split into two markets: AI and everything else.
“In AI, talent and IP value often dominate, including outsized acqui-hires that would be irrational in other sectors,” he said.
However, in non-AI tech, pricing remains anchored in revenue multiples and public comparables, heavily influenced by unit economics and operational KPIs.
“Looking into 2026, I expect greater financial discipline across all sectors, including AI, with stronger emphasis on sustainable P&Ls and defensible unit economics,” he predicted.
KPMG’s Bahal said that while traditional valuation metrics such as revenue multiples still play a role, acquisition prices are increasingly being dictated by the strategic value of a company’s talent and its intellectual property.
“This fundamental shift toward valuing people and technology over pure revenue is the new reality in dealmaking, especially as the ‘acqui-hire’ trend accelerates to secure top engineering talent in high-demand fields like AI,” he said.
Unlike Sagie, he thinks this trend is not temporary.
“It is expected to intensify through 2026 as the war for talent and unique technological capabilities continues to be a primary driver of value,” he predicted.
M&A driven by down rounds
Talent and technology weren’t the only things driving M&A activity.
In Hoebarth’s view, the most common trigger event in 2025 was a funding crunch. Because there is so much money flowing into AI companies, it can be easy to forget that a lot of other sectors are struggling.
“Many founders opted to be acquired when facing a down round or failed raise,” Hoebarth said. “We saw startup down rounds hit a decade high — about 16% of deals — this year, so rather than accept significant dilution, founders did a pivot to M&A. These down rounds get lost in the broader AI narrative, which continues to be very positive, for now.”
Mignano agrees. In 2025, the most common practical trigger that pushed early-stage founders to sell wasn’t a single dramatic event but a confluence of many, she said.
Those events include the inability to raise the next round at all or on good terms. If an AI company, the AI technology was not defensible “enough” to get it to the next round, and founder fatigue after a number of years where they have been financially strapped.
Another factor?
“Expansion and increased revenue metrics require a capital-intensive GTM build that the current investors won’t fund and that a possible acquirer may fund post-acquisition,” Mignano noted.
Looking ahead
So what’s ahead for 2026?
Bahal believes that the trajectory of the M&A market in 2026 will be determined by the overall health and stability of the economy.
“A bull case would be fueled by the need to continue the digital transformation of every business, a favorable regulatory environment, falling interest rates and continued economic growth, which would give dealmakers the confidence to pursue strategic acquisitions, particularly in technology and AI,” he said.
Conversely, Bahal believes that a bear case would emerge from an economic downturn, marked by higher inflation or increased regulatory scrutiny and increased geopolitical uncertainty, creating headwinds that would cause both buyers and sellers to pause dealmaking.
Hoebarth notes that EY-Parthenon Americas is forecasting a modest increase in M&A activity in 2026, and definitely lower than what occurred this year. The U.S. M&A deal volume is expected to grow about 3%, following a 9% increase in 2025, according to their data.
In his view, bull case factors include easing monetary policy and continued lower interest rates, strong corporate balance sheets, significant private equity dry powder, and continued innovation in high-growth sectors like AI and cybersecurity.
Hoebarth believes that bear case factors include an economic downturn, trade and tariff uncertainty, tight funding markets limiting liquidity, and increased regulatory scrutiny, especially in China, the EU and the U.K., or geopolitical barriers slowing deal approvals.
“The elephant in the room is still the question of what happens with AI,” he said. “We do see early signs of a pullback in the AI space, which would have ripple effects far beyond the tech ecosystem.”
Sagie believes that if the macro environment “stops getting in the way, M&A activity will take care of itself.”
“Lower and more predictable interest rates, fewer regulatory surprises, and easing trade tensions would give boards and buyers the confidence to plan again,” he said. “When that happens, consolidation comes back naturally, not because companies are desperate, but because buying becomes a faster and less risky way to grow than building from scratch.”
The bear case is not about technology suddenly breaking, Sagie points out.
“It is about hesitation,” he said. “If rates stay high, geopolitical noise continues, or capital markets remain jumpy, buyers slow down. Decisions take longer, deals get smaller, and only the transactions with a very clear strategic rationale actually close. What separates the two is confidence. When executives believe they can underwrite the next three to five years with some degree of certainty, M&A moves quickly. When that confidence is missing, even good assets struggle to transact.”
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Illustration: Dom Guzman
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