Australia’s M&A Market in 2026: Foreign Capital, AI and Strategic Acquisitions Take Centre Stage

Australia’s mergers and acquisitions market is entering 2026 with a more strategic mindset. While overall deal activity softened in 2025, investors and corporate leaders are showing renewed confidence in transactions that can deliver technology, new capabilities, infrastructure and long-term competitive advantages. According to PwC Australia’s 2026 M&A Outlook, Australian deal value reached approximately US$79.5 billion in 2025, while deal volume fell 8% to 1,285 transactions. Despite the decline, more than half of Australian CEOs surveyed said they plan to pursue major acquisitions over the next three years. The message for 2026 is becoming increasingly clear: Australian M&A is moving beyond simply buying scale. The strongest deals are increasingly about transformation.

Foreign Investment Is Becoming a Major Force

One of the most significant developments is the growing presence of international investors.

Inbound transactions represented 45% of Australia's total M&A deal value in 2025, compared with 30% the previous year. US, Canadian and Japanese investors were among the most active sources of international capital. This international appetite could remain an important feature of the Australian market throughout 2026.

Australia offers investors exposure to established businesses, natural resources, infrastructure, healthcare, financial services and a relatively mature corporate environment. For Asian investors in particular, Australia's geographic position and strong economic ties across the Asia-Pacific region make it an attractive destination for long-term investment. Japanese investment is expected to be particularly noteworthy. PwC reported that 9% of Japanese CEOs surveyed planned to invest in Australia within the following 12 months, nearly twice the corresponding US figure. Energy, infrastructure and resilient mid-market businesses are among the areas likely to attract attention.

M&A Is Becoming More About Capabilities Than Size

One of the biggest shifts in Australia's M&A landscape is the reason companies are buying.

Instead of pursuing acquisitions simply to increase market share, businesses are increasingly looking for capabilities they cannot easily build internally. PwC found that 36% of Australian CEOs planning acquisitions were specifically targeting new capabilities, while 27% were considering opportunities outside their traditional sectors. Technology is a major part of this shift. Artificial intelligence, automation, cybersecurity, data analytics and digital platforms are becoming strategic assets. An acquisition can provide a company with access to technology, specialist talent and intellectual property much faster than developing those capabilities internally.

This means smaller technology and specialist businesses could become increasingly attractive acquisition targets, particularly when they provide a clear competitive advantage.

AI Is Changing the Definition of a Strategic Acquisition

Artificial intelligence is also influencing how Australian businesses evaluate potential acquisitions.

KPMG's 2026 research found that 63% of Australian business leaders identified new technologies, including AI and the challenges surrounding implementation and ethics, as their biggest concern for 2026. Digital transformation ranked second at 54%. This creates an interesting M&A dynamic. Companies may increasingly acquire businesses not simply because of their existing revenue, but because of their technology, data, talent or ability to accelerate digital transformation. For buyers, however, this also means due diligence must go deeper. Understanding an acquisition's technology infrastructure, data quality, cybersecurity exposure, AI governance and intellectual-property ownership can be just as important as analysing its financial statements.

Energy and Infrastructure Remain in the Spotlight

Energy, utilities and resources were responsible for a particularly large share of Australian deal value in 2025. PwC reported that the sector's share increased from 25% to 46%, reflecting investor interest in assets with predictable revenues and exposure to the energy transition. Digital infrastructure is also emerging as a major investment theme. Data centres, energy networks, storage facilities and other infrastructure assets are attracting investors looking for long-term demand and stable cash flows. Recent Australian deal activity illustrates the scale of this trend. IFM Investors and Global Infrastructure Partners have been reported to be among parties pursuing STACK Infrastructure's Asia-Pacific data-centre assets in a transaction valued at around US$30 billion. The proposed portfolio includes large campuses in Sydney and Melbourne. The growing demand for AI computing capacity is likely to strengthen the connection between technology, energy and infrastructure investment.

Private Equity Could Become More Active — But Not Only as a Buyer

Private equity is another important component of the 2026 outlook.

PwC reported that Australian private-equity buyouts increased 32% in value in 2025, reaching US$30.5 billion across 95 deals. However, 2026 may be as much about exits as acquisitions. Many private-equity investors are holding assets for longer periods than originally expected. As pressure builds to return capital to investors, more portfolio companies could come to market. That creates opportunities for strategic buyers, competing private-equity firms and other investors looking for established businesses with growth potential.

The mid-market could be particularly active as business owners consider succession, consolidation and new sources of capital.

The Mid-Market Could Deliver Some of the Most Interesting Deals

Large transactions often dominate headlines, but Australia's mid-market may offer some of the most interesting opportunities in 2026. KPMG describes Australia's mid-market M&A environment as entering 2026 with renewed energy, with both financial sponsors and strategic buyers pursuing opportunities. It also highlights continued demand for businesses with strong fundamentals and differentiated offerings. For many family-owned and founder-led businesses, M&A can provide a pathway for succession, expansion or partial liquidity.

PwC found that industrials and consumer businesses together accounted for 45% of transactions by deal count in 2025, with succession planning, intergenerational wealth transfer and technological change contributing to activity. This suggests that M&A is not only being driven by large corporations. Australia's privately owned business community could remain an important source of opportunities.

Deal Structures Are Becoming More Flexible

Another trend to watch is the evolution of deal structures. Rather than pursuing straightforward 100% acquisitions, investors are increasingly considering minority investments, staged transactions, partnerships and other structures that provide greater flexibility. For buyers, these structures can reduce initial financial exposure while providing the opportunity to increase ownership later. For sellers, they can create liquidity without requiring them to completely exit the business. This flexibility may become increasingly important in a market where buyers and sellers do not always agree on valuations.

Regulation Will Matter More

Australia's M&A environment is also becoming more closely regulated. From January 2026, certain transactions became subject to mandatory Australian Competition and Consumer Commission notification and clearance requirements before completion. Foreign investment reviews are also becoming increasingly important for transactions involving critical infrastructure, minerals, technology and sensitive data. For companies considering a transaction, regulatory planning can no longer be treated as an issue to address at the end of the process.

Early preparation, careful due diligence and realistic transaction timelines will become increasingly important.

This is particularly relevant for cross-border transactions, where buyers may need to navigate competition, foreign investment and national-interest considerations simultaneously.

What Investors Should Watch in 2026?

Several themes could define Australia's M&A market during the remainder of 2026.

1. Foreign capital:	International investors are likely to remain active, particularly from the US, Canada and Japan.
2. AI and technology:	Businesses with valuable technology, data, cybersecurity capabilities and specialist talent could attract strategic buyers.
3. Energy transition:	Renewable energy, grid infrastructure, storage and related assets are likely to remain important investment themes.
4. Digital infrastructure:	Data centres and other infrastructure supporting the growth of AI and cloud computing could command significant investor attention.
5. Private-equity exits:	Pressure to realise returns could increase the number of businesses coming to market.
6. Mid-market consolidation:	Founder succession, intergenerational wealth transfer and competitive pressures could generate additional opportunities.
7. Regulatory scrutiny:	Buyers will need to factor competition and foreign investment requirements into deal planning much earlier.

The Bigger Picture

Australia's M&A market may not be defined by record transaction volumes in 2026. Instead, the year could be defined by the quality and strategic purpose of the deals being pursued. The strongest transactions are likely to involve businesses that offer something difficult to replicate: technology, infrastructure, intellectual property, access to new markets, resilient revenue streams or specialist capabilities. For corporate leaders, the question is therefore shifting from “How can we get bigger?” to “What capabilities do we need to compete in the next decade?”

For investors, that creates an increasingly selective market. Australia remains an attractive destination for international capital, but buyers are likely to become more disciplined about valuation, due diligence and long-term value creation. With foreign investment rising, private equity returning and strategic acquisitions increasingly focused on transformation, 2026 could prove to be an important turning point for Australian M&A.

The next wave of Australian dealmaking may not simply create larger companies. It could create more technologically capable, internationally connected and future-ready businesses. #InvestInAustralia _ Trendspire In Asia