The year’s dealmaking boom has hit its first serious test. According to analysis from LSEG Data & Analytics, global M&A has reached $3.9tn so far this year. That is up 28% and the strongest start since 2021. Even excluding strategic stake purchases, which reflect historic investment in technology, the total stands at $2.9tn, up 20% and still a five-year high.
Q3, however, broke the momentum. Activity fell to $993.4bn, down 41% on Q2 and the first quarter below $1tn since Q2 2025. LSEG Data & Analytics discussed the trends in the latest episode of LSEG’s Behind the Deals video series, alongside LSEG head of news Elizabeth Kuhr and Reuters European M&A editor Anousha Sakoui.
The slowdown was concentrated at the top end of the market. Q2 produced 26 deals worth more than $10bn, while Q3 managed just ten, the fewest since Q4 2024. Transactions of that scale need clear financing and confident boards. Both are harder to secure when the direction of interest rates is unclear and geopolitical risk is rising. Seasonality and a strong first half explain part of the drop, as Sakoui noted, but LSEG Data & Analytics argues they cannot account for a 62% fall in mega-deal count.
Fee data tell the same story. Q3 investment banking fees totalled $35.2bn, down 19% from a Q2 that was the strongest quarter since LSEG’s records began in 2000. Year-to-date fees remain robust at $117bn, up 12% and less than 1% below the 2021 record.
The pause was broad. US target M&A fell 57% in Q3 and Europe dropped 36%, while Asia Pacific rose 8% quarter on quarter. Technology and industrials each fell 57%, and energy fell 50%. Year to date, however, US M&A sits at an all-time high of $2.0tn, Europe at a five-year high of $882bn and Asia Pacific at a five-year high of $613bn. Deal count is down 8% to its lowest since 2020, yet 122 deals have exceeded $5bn, the most since 2021. Fewer, larger deals are carrying the market.
Cross-border M&A has reached $1.3tn, up 31%. LSEG Data & Analytics notes that US buyers account for about a third of that activity, targeting discounted valuations in Europe and the UK. Europe is consolidating, with half its cross-border activity staying within the region, illustrated by KONE’s $34bn bid for TK Elevator and ENGIE’s $21bn deal for UK Power Networks. Japan shows how fast rate shifts can redirect capital: Japan-targeted M&A is down 40% to $113bn, yet fees from Japan hit a record $4.7bn as corporate bond issuance reached roughly $240bn.
Looking to Q4, LSEG Data & Analytics will watch whether mega-deals return, with about $43bn in fees needed for a record year. Other signals include a US rebound, potential IPOs from Anthropic and OpenAI testing equity market depth, private equity deployment after sponsor-backed M&A hit a record $891bn, European consolidation and Japan’s debt market.
The verdict from LSEG Data & Analytics is that the market is repricing, not retreating. Q4 will reveal whether the biggest deals come back.
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