10. IPOs and M&A activity: Multiple sectors set to benefit

IPO market: Recovery with discipline
The US IPO market was subdued through much of 2022–24 amid inflation, rising rates and market volatility. It began to recover in 2025 (Figure 14) and we expect that momentum to carry into 2026. Companies in high-growth sectors – AI, biotech, clean energy and green infrastructure – are likely to drive issuance, as investor demand for innovation and thematic exposure remains strong. Private equity (PE) sponsors are also likely to see 2026 as an attractive exit window with interest rates expected to trough. Indeed,PE-backed IPO listings more than doubled in the first three quarters of 2025 compared to the same period in 2024.¹⁸

However, stricter regulatory requirements around disclosures, governance and ESG standards raise the bar for public listings. Companies are also tending to stay private for longer, preferring to reach greater scale before entering public markets. Valuation conditions matter: if equity multiples compress due to economic slowdown or policy tightening, issuance could pause. Overall, 2026 is best characterised as a year of IPO recovery – more active than 2025, but far from the exuberance of 2020–21.

Global growth in IPOs is set to remain a key phenomenon. In the first half of 2025, there were almost as many IPOs in India and China as in the US. This is despite the number of IPOs in these countries declining compared to the same period a year earlier. However, while IPO volumes declined in Asia, proceeds rose, bolstered by listings of chips and semiconductor manufacturing companies. This was evidenced by the fact the amount raised in China was higher than in the US.

Return of the SPAC
Special Purpose Acquisition Companies (SPACs) are listed companies with high levels of liquidity or credit lines which can be quickly deployed to acquire other companies. They soared in popularity earlier in the decade before collapsing under poor performance and regulatory backlash but are showing signs of a comeback. In the first half of 2025, SPACs represented over 40% of IPO issuance in the US (Figure 15). This was supported by a favourable regulatory backdrop after the Securities and Exchange Commission implemented enhanced disclosure and investor protection rules in 2024.

Still, headwinds remain. Investor scepticism lingers after underwhelming post-merger performance in the last cycle. Quality deal flow is another challenge: sponsors must secure credible targets with sound financials, which will limit volume compared to the earlier boom. Thus, SPACs are unlikely to regain their past scale, but they will persist as one option within a diversified menu of listing routes.

M&A: Strategic but constrained
M&A activity slowed in 2024–25, reflecting higher interest rates, market uncertainty and regulatory pushback. In 2026, conditions appear somewhat more supportive. Corporates face strategic imperatives to transform business models, secure supply chains, and invest in digital and green transitions.
These pressures create demand for consolidation and bolt-on acquisitions. Private equity, holding substantial dry powder, is also poised to re-enter the market.

Cross-border M&A could regain momentum as companies reposition for supply-chain resilience and market access. However, geopolitical tensions, sanctions regimes and investment-screening frameworks will complicate global dealmaking. Regulatory scrutiny, particularly in technology, healthcare, and infrastructure, remains a significant headwind. Financing costs, while lower than the peak, will still constrain highly leveraged transactions. As a result, dealmakers in 2026 will likely prioritise quality over volume, focusing on strategic alignment rather than opportunistic expansion.

¹⁸ EY Global IPO Trends Q3 2025