2026 M&A Outlook and Transaction Preparedness

Looking ahead, there is a sense of optimism for the 2026 M&A landscape. The surge in deal value and the reopening of the IPO window in late 2025 have signaled a much-needed return of market liquidity.

We are seeing a convergence of expectations: recent down-round IPOs suggest that sellers and investors are finally reconciling with current market realities, moving past the exuberance of 2020–2021. Combined with easing interest rates, continued elevated levels of private equity “dry powder,” and pressure from LPs to return capital, the foundation for a robust deal year is set.

However, momentum will be tempered by geopolitical tensions, evolving tariff regimes, and a newly disciplined approach from acquirors. In 2026, expect an increasing number of acquirers to leverage AI-augmented due diligence, allowing buyers to scrutinize targets with unprecedented depth and speed.

If you are considering a transaction in the new year, below are a few tips that can help you achieve your desired outcome.

1. Form a Strong Team

Mergers and acquisitions are complex transactions that touch multiple subject areas. It takes a team to drive success.

a. External: Engage your core advisors (accounting, legal and investment banking) early. In highly regulated industries such as energy or fin tech, consider engaging industry-specific advisors to prepare for specialized due diligence.

b. Internal: Determine who needs to be “brought under the tent.” Oftentimes, these are employees with knowledge of core diligence areas or expertise required to execute on the transaction

2. Clarify Your Strategic Objectives (Why, How, and Alternatives)

Why – As a seller, are you looking to monetize your company in advance of retirement or your next venture, or are you seeking to continue to grow and scale your business with a larger partner? As a buyer, what are the core assets you are targeting (e.g., talent, customers, infrastructure, IP)? Reflecting on your end goals at the beginning of the process can help identify the right counterparties and guide the acquisition process.

How – The two most common processes for an acquisition are an auction or a privately negotiated sale. An auction has the benefit of driving competition. A privately negotiated sale prioritizes speed and efficiency.

What are your Alternatives – Know your best alternative to a negotiated agreement (”BATNA”). A carefully considered BATNA preserves optionality, guarding against the pursuit of a transaction that is no longer beneficial and increasing negotiating leverage.

3. Evaluate Transaction Timing

The right timing can make all the difference and it is important to consider both micro and macro factors.

a. Micro: What is the current state of the business and is momentum on your side? It is much better to launch a sales process after you have just signed up a new, significant customer as opposed to when your largest customer recently churned.

b. Macro: Is the current market more buyer or seller favorable? Are general market conditions favorable for your business or industry?

4. Prepare for Due Diligence Early

Due diligence can be grueling, and Buyers in 2026 are continuing to perform fulsome reviews of acquisition targets. Advanced planning and organization will not only lessen the burden of due diligence but instill confidence in the buyer, facilitating an efficient process and avoiding incremental “price chips.”

The following is a general list of items to prepare in advance of an acquisition process:

1. Governing Documents: Certificate of Incorporation, Certificate of Formation, Operating Agreement, Bylaws, Stockholder Agreement, and other similar agreements.
2. Capitalization Table: An audited, clean cap table (including any outstanding equity awards or convertibles).
3. Schedule of Indebtedness: All debt instruments and lien filings.
4. Minutes and Consents: Board and stockholder minutes and consents.
5. Labor and Employees: An employee census summarizing all employees and contractors (including their pay, role, tenure, classification, and status). Also, be prepared to provide copies of employment and contractor agreements and copies of all employe benefit plans.
6. Intellectual Property: A schedule of all patents, trademarks, and copyrights and confirmation of the company’s ownership of its IP (i.e., appropriate Proprietary Information and Invention Agreements and Technology Assignment Agreements).
7. Material Contracts: Focus on contracts with your top ten customers/suppliers, “change of control” provisions, material in-bound/out-bound IP licenses and agreements with exclusivity, most-favored nation, take-or-pay or other atypical benefits to the counterparty.
8. Permits: All state and local licenses and registrations.
9. Litigation: Descriptions of any past or threatened legal/regulatory matters.
10. Insurance: Schedule of policies and claims history.
11. Financial/Tax: Financial statements and prior tax filings.
12. Data privacy: Documented policies and evidence of compliance.

In short, there are two key points worth keeping top of mind for diligence.

First, if you can only prioritize two things, focus on your cap table and IP. A buyer who cannot confirm who owns the company or who owns its IP will either walk away or use that uncertainty to renegotiate the price and terms.

Second, identify any material issues upfront and address them proactively. Surprises uncovered during due diligence can impact trust and can lead to escrows or reduced valuations. Demonstrating awareness of issues, and having a plan to address them, creates good faith and keeps you in charge of the narrative.

5. Align on Post-Closing Roles Early

The post-closing involvement of founders and key executives is one of the few non-economic issues that can scuttle a deal.  Early in the process, buyers and sellers should have a candid conversation to align expectations for management’s future roles and any transition periods.  Buyers often view key talent as the “secret sauce” and may require founders to remain through a defined integration period to preserve institutional knowledge.  However, this often comes with strings attached: re-vesting of equity, new employment agreements, or restrictive covenants like non-competes.  Surfacing these issues and agreeing on a go-forward plan at the outset avoids difficult conversations at the eleventh hour and ensures a smooth handoff.

6. Confirm Required Approvals and Stakeholder Alignment

Review your internal governance documents and determine who must approve the proposed transaction. Consider whether any approvals may present an obstacle to closing and determine the best way to engage with the relevant stakeholders.

1. General: Typically, an acquisition requires the approval of the majority of the board of directors and stockholders holding a majority of the outstanding shares of stock.
2. Special Governance Rights: A company’s governance documents may include protective provisions, requiring the approval of certain specified directors or stockholders for an acquisition. Other common sources of special approval rights include Stockholder’s Agreements and side letters.

7. Think through Key Deal Terms and any “Deal Breakers”

The definitive transaction documents always involve negotiation between the parties. Take time to reflect on what is nonnegotiable and where you expect your counterparties’ priorities lie.

1. Purchase Price: Items to consider include the form of consideration (e.g., equity or cash) and timing for the payment of consideration (e.g., holdbacks, escrows, earnouts).
2. Closing: Do you prefer to sign and close simultaneously, or should there be a delay between signing and closing?
3. Closing Deliverables: Are there certain agreements or conditions that should be met prior to closing?
4. Indemnification: Most private acquisition agreements include some form of indemnification. However, significant negotiation occurs around the limitations. Is there a period within which claims must be made or is there a cap that should be included on total exposure?
5. Covenants: Are there any pre-closing or post-closing obligations that will be necessary? For example, a transaction requiring regulatory approval will address any coordination required between the parties to obtain such approval.

While 2026 presents meaningful opportunities for well-positioned companies, success will favor those that prepare early and approach transactions with discipline and a practical approach. In a market defined by sharper diligence, recalibrated valuations, and increasingly sophisticated buyers, readiness is no longer optional—it is a differentiator. Companies that invest now in clean financials, thoughtful governance, and a clear growth narrative will be best equipped to navigate scrutiny and capitalize on renewed market liquidity. With the right preparation and advisors, 2026 can be a year to not only transact, but to transact well.