Dive Brief:

• Two-thirds of U.S. business leaders say they would do more merger-and-acquisition deals in 2026 compared with this year, according to survey results released Wednesday by Big Four accounting and consulting firm KPMG.
• Dealmakers responding to the survey pointed to the expectation of further interest-rate cuts next year as a key driver of future M&A activity, coupled with tax policy changes under the One Big Beautiful Bill Act, according to the report. 
• “After the false dawns of the last two years, the tailwinds of falling interest rates and lower taxes are expected to overcome the headwinds of tariffs and the [government] shutdown to bring a much better year for M&A,” Dean Bell, head of deal advisory and strategy for KPMG US, said in a statement included in the report.

Dive Insight:

The research comes on the heels of the Federal Reserve’s Dec. 10 decision to trim the main interest rate by a quarter point.

The Fed’s action has provided “a welcome tailwind” to fuel M&A activity heading into 2026, according to Mitch Berlin, Ernst & Young Americas vice chair at EY-Parthenon.

“Lowering the cost of capital increases the affordability of leveraged transactions, providing dealmakers with enhanced flexibility and confidence to pursue new opportunities as we anticipate deal volume will exceed pre-COVID levels,” he said in an email last week.

U.S. M&A volume for deals above $100 million is projected to rise 3% in 2026, following an estimated 9% gain this year, according to an October report from EY.

In an optimistic scenario — including conditions such as a “meaningful” reduction in U.S. tariffs, decreased global trade tensions and stronger productivity growth — total deal volume could jump by as much as 7% next year, EY predicted.

“The market is effectively returning to, and in some cases exceeding, pre-pandemic levels,” Josh Putnam, global and Americas corporate finance leader at EY-Parthenon, said in a Thursday email. “CFOs are aggressively cleaning up portfolios through divestitures and spin-offs to free up the capital needed for their core business. We call this 'earning the right to grow' — finance chiefs must prove to the market that they can generate excess returns before getting permission to chase significant, value-driving deals.”

2025 began with high hopes for M&A, but the outlook was tempered in April by the Trump administration’s “Liberation Day” tariffs, according to the KPMG report. That move, along with subsequent tariff announcements, caused significant uncertainty for dealmakers.

However, the passage of the One Big Beautiful Bill Act in July provided a tailwind, increasing the appetite for dealmaking, KPMG said. While the government shutdown in the fall introduced delays and additional costs for some transactions, it did not lead to significant deal cancellations, according to the report.

“Dealmakers seem to have gotten used to the ‘new normal’ of tariff disruption and are moving ahead with M&A plans all the same,” the report said.

KPMG surveyed 300 M&A decision-makers at large U.S. private equity firms and corporations between Nov. 24 and Dec. 5.