Top 5 M&A trends for 2025 and predictions for 2026

Private equity activity through 2025 has underscored several clear themes that we expect will persist into 2026. The following five trends reflect how sponsors are sourcing opportunities, managing risk, and positioning for exits in an improving market.

1. Get the tickers off the boards: Increase in large cap sponsor take-privates

Private equity funds are continuing to find value on the ASX with a significant number of large-cap take-private (or attempted take-private) transactions in the second half of 2025. This includes CC Capital* / Insignia Financial, TPG / Infomedia*, EQT & CVC* / AUB, Brookfield & GIC* / National Storage REIT, Adamantem* / Apiam Animal Health and Macquarie Asset Management / Qube.

Appetite for take-privates appears strong and we are seeing public deals launching with premiums above 50%. Standout outcomes include Insignia Financial (57%), Johns Lyng Group (77%) and Apiam Animal Health (63%).

In addition, bidders are becoming increasingly more aggressive to secure outcomes in volatile markets, frequently deploying pre-bid stakes and locking in voting intention statements. As mentioned in the Ashurst M&A Deal Report, pre-bid stakes create a 'foothold' ahead of launching a transaction which has a twofold benefit: (1) increases the likelihood that the bid will be successful and (2) deters interlopers.

The competition for listed targets has intensified, particularly amongst private equity players. We expect this to continue.

2. Management roll in sponsor take-privates

When participating in a take-private transaction, sponsors are increasingly requiring key management and/or founders to roll a significant part of their stake.

Whilst traditionally stub equity offers to all shareholders have been used to avoid management being placed in a separate class, sponsors are becoming increasingly comfortable only making roll offers to management and relying on the rest of the shareholder base to support the deal and follow the Board's recommendation.

These dynamics were seen in the following 2025 deals:

• In PEP's take-private of Johns Lyng Group where key management were allowed the option to receive shares in PEP's unlisted acquiring entity which resulted in a separate class;
• PEP’s acquisition of SG Fleet where senior management shareholders were offered the ability to roll their equity interests into PEP's unlisted acquiring entity, again resulting in a separate class; and
• Adamantem's* take-private of QANTM Intellectual Property, a structure which was approved without the need for a separate voting class of shareholders between those who were eligible for stub equity and those who were not.

3. “Making friends” on the way in and out

Sponsors are increasingly teaming up both on the sell-side and buy-side to get deals done, most notably to de-risk an existing investment, jointly acquire large investments or execute bilateral sponsor to sponsor full exits.

There were a number of examples this year of sponsors partnering (or attempting to partner) to de-risk an existing or new investment, as seen when PAG partnered with CVC by selling a 45% stake in AVC, creating equal sponsorship alongside management (retaining a 10% stake) and EQT in its joint bid with CVC for AUB Group.

Bilateral transactions between sponsors have also increased, with sponsors sometimes trading price discovery via full sales processes for execution certainty via a bilateral exclusive engagement with another sponsor. Good examples of this include Advent International's acquisition of Automic from Five V and Five V's acquisition of Questas from Allegro.

4. Getting ahead of the curve (or the ACCC regime)

There has been a noticeable uptick in bolt-ons at the portfolio level by sponsors in Australia ahead of the ACCC mandatory regime coming in on 1 Jan 2026. The reforms introduce a mandatory notification regime with suspensory effect and lower filing thresholds which will capture these types of acquisitions for basically all private equity houses.

This year sponsors have been pulling forward pipeline deals to complete in 2025 ahead of the mandatory regime. We have also recently seen the ACCC facilitating transactions for non-contentious deals that may complete in 2026 with fast approvals under the current voluntary regime.

Looking to 2026, with the ACCC compulsory merger regime kicking in, the execution risk threshold for private equity transactions will be raised. Where sponsors were once easily able to implement a quick bolt-on, they should now expect longer timetables, more intrusive regulatory engagement, and more disclosure about fund activities and prior investments. In addition, for sponsors running sell-side competitive processes in 2026, careful thought will need to be given as to the selection of stage 2 bidders given the inability to pre-clear ACCC approval ahead of signing a deal.

5. Tide is turning: Recent history of limited sponsor divestments turning around

Deal activity is rising across M&A and IPO markets (see Ashurst's The Equity Capital Markets Report FY25). 2025 has seen strong exits from sponsors including Brookfield's circa AUD$4 billion exit of Aveo and Macquarie Management's sale of its US and Europe-based investment businesses for circa AUD$2.7 billion to Japan-based Nomura.

We should see more exits and distributions in 2026 as pressure for exits increases with the build-up of aging assets in sponsor portfolios.

Sponsors are also balancing outright disposals with structured exits (e.g. sell-downs and continuation vehicles) to optimise timing, valuation and portfolio construction. Where continuation vehicles were once seen to be a tool for problem children, sponsors are now utilising these as a genuine alternative to traditional exit pathways and to provide existing investors with an exit and new investors exposure to higher performing assets.

2026 and beyond:

Overall we are expecting another very active year for private equity in Australia with the number of sponsors looking to transact in Australia ever increasing with new entrants like Advent International and overseas based sponsors like General Atlantic all looking for local assets.

On the buy-side, we think disciplined take-privates will continue to unlock listed value and management alignment through thoughtfully structured stub equity or roll offers will remain central. Sponsors remain well placed to offer certainty over strategics in relation to the ACCC mandatory regime and together with creative deal structuring and management incentives can expect to progress well in competitive processes.

On the sell-side, with exit windows reopening, 2026 could see the return of dual track processes with the IPO market looking more prospective following an extended quiet period.