What has 2025 taught us about APAC M&A and what comes next in 2026?

As we kick off the new year, we went around the InterFinancial team and asked a simple question: What did you see in the APAC M&A market in 2025, and what does it mean for 2026? 

The answers were candid, thoughtful and in some cases, refreshingly blunt. While the headlines were dominated by AI hype, geopolitical noise and regulatory change, the lived experience of dealmaking told a more nuanced story. Below are the key themes our team observed and what they think may come next.  

2025 in review: Plenty of talk, not much action

If 2025 had a defining feature, it was hesitation.  

Across the region, deal activity remained subdued. Many processes took longer than expected and a surprising number fell over late in the piece, often without a clear reason. Investor confidence, particularly from Europe, remained fragile and risk appetite was noticeably lower than in prior cycles.  

A recurring theme was a shift in mindset: buyers were far more focused on downside protection than upside potential. Due diligence became deeper, broader and more granular, with investors scrutinising risks through an increasingly conservative lens. In many cases, there was a clear asymmetry: fear of capital loss outweighed enthusiasm for growth.  

That said, not all signals were negative. The team noted an improvement in the quality of businesses coming to market. Nearly five years on from COVID, many businesses have adjusted to their ‘new normal’ and can now present multiple years of clean, post-pandemic earnings. Good assets, particularly those with strong fundamentals, continued to attract attention and command solid valuations.  

Valuations overall were relatively stable, though the bar for engaging in M&A lifted. Margin compression, driven by wage inflation and rising compliance costs, was evident across multiple sectors, putting pressure on earnings quality and forecasts. 

Themes that dominated the conversation

A handful of topics cut across almost every discussion. 

AI was everywhere. Whether as an opportunity, a threat or simply a question mark, it dominated investor conversations. Closely linked to that was a growing recognition that some lower-quality assets were being pushed to market, often wrapped in optimistic AI narratives.  

Private credit also continued its rise, with significant capital flowing into alternative funding structures. At the same time, the private equity landscape expanded further, with new funds, niche strategies and broader cheque sizes entering the Australian and APAC markets.  

Regulation and geopolitics added another layer of complexity. Australia’s new ACCC approval regime prompted a rush to close deals under the old framework, while global uncertainty, particularly around tariffs and the looming influence of Donald Trump, remained a persistent backdrop to decision-making.  

Looking ahead to 2026

Despite the challenges of 2025, the mood heading into 2026 is noticeably more constructive.  

After several years of below-average deal volumes, there is a sense that significant dry powder is waiting to be deployed. Combined with improving asset quality, many expect transaction activity to pick up, albeit without a return to exuberance.  

The ASX sitting near all-time highs has also reignited IPO conversations, following a three-year lull. While volatility is expected to persist globally, business owners and investors alike appear more accustomed to operating amid geopolitical noise.  

Another notable shift is sector breadth. Where COVID-era dealmaking was concentrated in perceived “safe” sectors like health, education and ICT, most sectors now feel like they’re back on the table. The caveat? Businesses must clearly articulate why they are special. Competitive moats, defensible IP, scalable models and a sharp understanding of target customers are no longer optional, they are prerequisites! 

What does this mean for business owners and investors?

If there’s one takeaway from our team’s reflections, it’s this: 2026 is shaping up to be a year where preparation meets opportunity. Capital is available, buyers are active and good businesses will attract strong interest, but only if they’re positioned clearly and realistically.  

Whether you’re a business owner considering a transaction in the next 12 – 24 months, or an investor looking to deploy capital in a more disciplined market, early conversations matter more than ever. Understanding how buyers are thinking, where capital is flowing and how your story lands in today’s environment can make a meaningful difference to outcomes.  

If you’re ready to chat or simply want a sounding board on what the current market might mean for you, we’d love to connect. Reach out to the InterFinancial team for a confidential discussion about your options and the opportunities ahead.