What to Expect for Tech M&A in 2026

Tech M&A is off to a confident start in 2026. Deal activity increased throughout 2025 and there is a sense of optimism based on available capital and greater predictability around process. At the same time, transactions are taking longer to structure, all cash deals are making way to share or mixed consideration, diligence is deeper, and fewer assumptions are being left to post-closing integration.

1. AI is reaching a “show me the money” moment. But AI saturation is a myth - and agentic AI is just getting started.

AI investment is now at a scale where investors are explicitly asking who will capture the margin. Public markets are pressing for evidence that heavy AI spend translates into durable profitability, in particular from software companies. This “show me the money” dynamic is visible across earnings commentary and investor reactions. 

At the same time, it would be a mistake to conclude that AI opportunity is saturated. While parts of the technology sector may feel crowded, the broader global economy remains at an early stage of adoption. In many enterprises, readiness and workflow redesign lag behind ever-improving model capability. 

We are only now starting to see the potential of "agentic AI" to disrupt customer service and workflow automation. As a result, established strategic buyers continue to pursue AI acquisitions to secure expertise, execution capacity and speed to deployment.

We see that buyers are no longer paying for broad AI exposure, but they are also not stepping away either. Instead, transactions are increasingly structured to manage uncertainty through milestones or other deferred/contingent consideration, share upside through share or mixed consideration, staged acquisitions and clearer downside protection where AI-driven value creation is still to be proven.

2. Sovereign AI: a high-growth opportunity, not a constraint

Sovereign AI should not be viewed exclusively as a regulatory or geopolitical constraint. In the UK and across Europe, it is emerging as a high-growth market spanning the full AI stack from secure infrastructure and energy through to the application layer. 

Government-led initiatives around AI capability, data sovereignty, secure compute and domestic infrastructure are translating into procurement programmes and long-term contracts. In the UK for example, government programmes announced for AI-adjacent infrastructure and services are validating sovereign AI as a bankable, long-term investment theme rather than a policy aspiration.

From a Tech M&A perspective, this has two practical consequences. 

First, assets capable of serving sovereign or regulated customers (because they meet localisation, security and governance requirements) are being reassessed. Government procurement frameworks and multi-year contracts provide revenue visibility and downside protection. For financial sponsors, that improves underwriting confidence. For strategic buyers, it can justify acquisitions that anchor regional platforms or support long-term ecosystem positioning. 

Second, sovereign demand is shaping how deals are structured. Where government or regulated-sector customers are central to the investment thesis, acquirers must ensure that post-closing ownership, data flows, hosting arrangements and control rights remain compatible with procurement rules and national policy objectives. This is driving deliberate use of ring-fenced entities, domestic operating companies and jurisdiction-specific governance models-not as regulatory concessions, but as commercial enablers. 

3. Secondaries are now mainstream

Secondaries are increasingly a core part of the tech financing and liquidity toolkit. With IPO markets still selective and traditional exits slower, founders, employees and early investors are turning to structured secondary sales (often run alongside a primary fundraise) to obtain liquidity while companies remain private.

The market is also becoming more institutional. Dedicated secondaries funds are larger and more active, making these transactions easier to execute and more likely to be expected by stakeholders. In Europe in particular, secondary planning is becoming standard for growth-stage companies.

For deal teams, secondaries matter because they drive cap-table complexity and alignment risk. Information rights, transfer restrictions, consent mechanics and governance implications need to be diligenced and documented with the same care as a control transaction, particularly where a future M&A or IPO exit is contemplated.

4. Fintech and payments are heading for selective consolidation

European fintech M&A remains active but disciplined. Regulatory capital requirements, licensing complexity and supervisory scrutiny mean that buyers are focused on assets with clean regulatory histories and scalable compliance frameworks. In payments, consolidation continues to be driven by scale economics. Margin pressure, scheme, infrastructure and settlement costs, fraud investment and regulatory overhead are pushing subscale players toward combination, while scaled platforms are using M&A to deepen infrastructure leverage and geographic reach. From a deal perspective, these transactions often appear straightforward commercially but carry concentrated execution risk in regulatory approvals, safeguarding arrangements and operational continuity. Phased acquisitions, conditional economics and regulatory-driven structuring remain common.

Recent high-profile founder departures that closely followed major fundraises have sharpened board focus on whether the value being invested in or acquired is durable if key individuals exit early. In AI-driven businesses, technical and market credibility are often concentrated in a small team. As a result, founder retention can no longer be assumed. It can be addressed through longer lock-ups, forfeiture and clawback mechanics, governance arrangements and deal economics that step down materially on early departure. For strategic investors and buyers, this protects roadmap execution and ecosystem credibility. For financial sponsors, it underpins value creation and exit certainty. In both cases, retention mechanisms are now viewed as core value-protection tools, not employment formalities.

IPO markets are reopening, but boards are treating IPOs as one exit option among several rather than a default outcome. Dual-track processes increase the importance of deal readiness and separation planning well ahead of any transaction. For M&A advisers, the lesson is preparation: structuring transactions that preserve optionality while frontier technologies mature.

Quantum computing and advanced robotics are having a strong moment. Several companies are moving toward public listings, while strategic transactions are reinforcing the sense that each of these sectors has entered a new phase. For quantum, planned IPOs and platform-building acquisitions suggest growing confidence in quantum as a long-duration investment theme, even as commercial timelines remain uneven, and industry is already seeing the near-term opportunities from combination of AI and advanced robotics.

What is sometimes described as the end of “easy tech roll-ups” is also being seen in deals as a push-back in allocation of execution risk. Buyers are less likely to assume that integration, system migration or AI-driven productivity gains will naturally follow closing. Transactions increasingly turn on whether these outcomes can realistically be delivered within a defined timeframe. For financial sponsors, this has led to greater reliance on milestone-based consideration and downside protection. For strategic buyers, it has resulted in tighter interim covenants, clearer integration planning and more defined walk-away rights where assumptions don't hold. Advisers should ensure that execution risk is properly identified, priced and allocated.

Tech M&A is off to a confident start this year and that confidence is itself driving activity. Given the pace at which the Tech sector evolves, the objective is not so much to predict technology trends as to design transactions that can withstand them. Successful Tech M&A in 2026 requires more than financial and legal technical expertise to protect value and flexibility through to exit, it requires a specialist understanding of the underlying tech assets, business model and market.