Using M&A as a tool to improve your strategic position in a world defined by AI, decarbonization and de‑globalization.
Megadeals and AI investment are creating a K-shaped M&A market, according to PWC’s latest Global M&A Industry Trends - Outlook 2026. PwC Belgium Partner and Deals Leader, Veronique Gillis, unpacks these findings in an interview.
“At the top of the K, we see mega deals of high-quality assets in trending industries – tech, energy transition, healthcare, critical infrastructure, and certain B2B services – that attract intense competition from strategic and large PE funds,” Gillis observes.
This comes after several years of market uncertainty following the Covid-19 pandemic. “Many corporates delevered over the last few years; refinancing early and sitting on cash for longer”, Gillis shares, adding that the decision to wait had mixed consequences: “On the one hand, it led to a backlog of both supply and demand, and subsequently many companies are now ‘overdue’ for sale, IPO, or portfolio reshaping. In other cases, assets deteriorated; competitive positions weakened, required capex grew, and debt maturities got closer.”
Now, corporates are deploying their M&A firepower again. In 2025, 111 transactions with values over 5 billion dollars were announced, being 76 percent more than in 2024. Around 600 transactions above 1 billion dollars also took place, suggesting renewed confidence among large corporates.
“They’ve realized that organic growth alone is not enough anymore”, Gillis explains. “M&A is sometimes the quickest way to achieve growth, particularly when companies need to acquire capabilities, scale, or technology.”
2026 M&A market realities
At the bottom of the K, we have assets with cyclical exposure, structural challenges, or complex needs – such as subscale industrials facing decarbonization costs, traditional retail, certain real estate segments”, Gillis shares.
This translates to several realities on the ground:
1. Deal sourcing is increasingly competitive for high-quality, scalable assets, particularly those with technology or AI relevance, while some sales just don’t clear in less attractive assets.
2. Large, strategic assets can still command strong valuations, while mid‑market assets face valuation gaps as buyers remain cautious.
Gillis explains that lenders are distinguishing much more sharply between EBITDA that is truly recurring and ‘adjusted’ EBITDA. For large, resilient assets with strong sponsors or corporate parents, we’re seeing leverage up to 5-6x EBITDA in some cases, while in the Belgian and broader European mid-market, leverage is more in the range of mid-4x (sometimes lower for cyclical businesses or where earnings visibility is limited).
She also says that covenant‑lite structures are far less common today, particularly in the European mid-market. “We see more maintenance covenants, tighter incurrence tests, and frequent information undertakings, particularly in mid‑market loans.”
In Belgium specifically, she adds, banks remain relationship‑driven, but even long‑standing clients face more structured discussions around leverage, headroom, and interest coverage.
Innovative ways businesses are bridging the gap
In the long-term, Gillis expects more segmentation in valuations. “Top‑tier assets will likely maintain premium multiples because large corporates and big funds will continue to compete for them, while average or undifferentiated assets could face a structural discount – especially if they lack scale, technology, or a clear ESG transition pathway.”
But she doesn’t believe this spells the end for smaller corporates or founder-led businesses. Gillis sees a lot of creativity in bridging the valuation gaps and financial constraints, including:
● Earn-outs and contingent or deferred considerations are widely being used to align price with future performance, particularly where there is uncertainty around normalised EBITDA or tech upside;
● Sellers retaining a meaningful stake and participate in future upside, while buyers reduce upfront cash outlay and risk. This is especially attractive to founders who want de‑risking without fully exiting;
● The use of preferred shares, PIK instruments, or convertible structures to adjust risk-return profiles – private equity and private credit providers are increasingly combining debt and equity‑like instruments; and;
● Vendors providing loans or reinvesting part of their proceeds.
Veronique Gillis, Partner and Deals Leader at PwC Belgium
The prepared bird catches the worm
Across Europe, and in Belgium specifically, this has reinforced the advantage of scale: buyers with multiple funding options (bank, private credit, or equity) can move decisively, while others must be more creative or patient. Those who do it early, may stand to benefit even more.
“For buyers, moving early can mean locking in capabilities or scale ahead of competitors, often at valuations that may still look attractive if interest rates fall further or earnings recover faster than expected”, Gillis explains. “For sellers, coming to market before we see ‘deal crowding’ in a sector can translate into more focused buyer attention and stronger competitive tensions.”
However, being well-prepared is key: “Things are moving more quickly now, with many delayed deals coming to market all at once and putting a real squeeze on advisors, diligence teams, and financing. One of the risks that comes with this is cutting corners”, Gillis cautions. “There’s also the danger of overly optimistic synergies or growth assumptions.”
She advises early movers to combine speed with discipline, and focus sharply on the key risks rather than trying to rush everything at once. “If M&A professionals use more tools like reps and warranties insurance or post-closing mechanisms for lower-risk areas, they can pay more attention to technology, AI, ESG, and regulation.”
AI in due diligence
This may also result in a more professionalized M&A environment, Gillis believes. “Processes are becoming more data-driven, with advanced analytics, AI-assisted due diligence, and deeper assessments of technology or cyber risks”, she says.
AI is influencing M&A on three levels; strategic rationale, deal targets, and how deals are executed. “Many board-level strategies now include explicit AI components, such as the automation of core processes, new AI-enabled products, or data monetization. When those capabilities can’t be built fast enough internally, companies turn to acquisitions to source the teams, models, data assets, or platforms they need”, Gillis explains.
However, she warns that dealmakers still need to use their expertise to discern between false promises and what’s possible. “Vague references to ‘AI potential’ should not attract large premia. You need a disciplined framework rather.”
A few practical considerations include:
● Can management articulate specific cases where AI will create value (revenue increase, cost reduction, risk mitigation), with quantifiable impact and a realistic adoption timeline?
● Can the buyer actually integrate the AI capability – technically, culturally and operationally?
● Is there a moat (regulatory approvals, proprietary datasets, specialized models, embedded customer relationships) or can new entrants copy the proposition quickly?
“If those questions score positively, it can justify paying for AI‑driven upside or moving faster than usual. If not, the AI angle should be treated as optionality, not as a basis for a significant valuation premium”, Gillis advises.
But perhaps the most important question dealmakers should be asking in 2026 is: “Does this deal fundamentally improve my strategic position in a world defined by AI, decarbonization and de‑globalization?”
Gillis concludes that the winners will be decisive dealmakers, not those waiting for ideal conditions.
Check out PWC’s latest Global M&A Industry Trends - Outlook 2026 Report here….
