‘A map tells you where you have been, where you are and where you are going – in a sense it is three tenses in once.’ - Peter Greenaway, director the Draughtsman’s Contract
Geopolitics has transformed dealmaking, shaping and influencing transactions. Deals are now as much a reflection of political geography as they are a business opportunity. As we increasingly live these “three tenses” at once, a new dealmaking paradigm is emerging. Our predictions for dealmaking in 2026, in response to the rupture of the world order, are below.
Predictions
- Geostrategy will be embedded in business decision-making as a key (but not the only) consideration in the evaluation of price and value, deal certainty and execution efficiency and post-completion value.
- Geopolitical due diligence including in depth analysis of sanctions, ownership structures and supply chain vulnerabilities (supported by an increased use of AI to assist with identifying the inputs to these assessments) will increase.
- A return to the core - an increase in demergers as companies seek to separate businesses with divergent lifecycles, strategies or market attractiveness in the face of geopolitical risk and uncertainty. Unlike previous demerger cycles, the concept of ‘core’ may expand to include key business inputs and adjacencies to address the weaponisation of interdependence across supply chains.
- A new focus on assets located in middle powers as a strategic link of influence.
- Ongoing focus on ‘safe haven’ targets as a hedge to political risk. Unlike previous economic cycles, the identity of the acquirer of these safe haven assets will be subject to significant regulatory scrutiny.
- Ongoing drive and desire for asset classes critical to geo-competition, including renewable energy, AI and critical minerals. Pro-active regulatory engagement much earlier in the process will be fundamental to the success of these transactions.
- Ongoing use of deal structures and techniques to manage geopolitical risk, including joint ventures, minority stakes and carve-outs. With the rarity and difficulties with earn outs in public transactions, scrip-for-scrip transactions could assist in bridging the uncertainty gap – a difficult tightrope when cash may remain king with stagflation concerns.
- Ongoing government involvement in transactions (in some cases, driving transactions) to take equity positions and golden shares, as a means of preserving geopolitical expectations and national interest.
- Ongoing and potentially longer and more complex approvals processes – we expect reverse break fees linked to a failure to obtain approvals within a particular timeframe to become an increasingly common fixture, providing a clear outcome and more economic clout than long prolonged negotiations over regulatory conditions or ‘hell or high water’ clauses. The regulatory equivalent of a ‘put up or shut up’. This is counterposed against the need for deals to be executed quickly.
Spotlight
The rise of the middle power
M&A will continue to be about accelerating growth, acquiring new capabilities (particularly technology and AI) and strengthening customer reach. With the world fracturing, dealmaking will be focused on geography, which will be as much about distance as it is influence.
Acquisitions of assets located in Southeast Asia, once seen as ‘bolt on acquisitions’, or places for outsourcing have increasingly been viewed as strategic corridors to provide a hedge against geopolitical risk, including:
- Manufacturing: A ‘China Plus One’ strategy to diversify manufacturing, including electronics in Vietnam, semiconductors in Malaysia and automotive components in Thailand.
- Logistics & Infrastructure:The region's role as a global supply chain hub with major investments by Southeast Asian countries in intermodal facilities, which can serve as a bridge between East and West.
- Diversified Growth:Southeast Asia is shifting from purely export-driven models to incorporating significant domestic consumption, particularly in Indonesia and Vietnam.
Beyond Southeast Asia, we think the now seminal speech by the Prime Minister of Canada at DAVOS, represents a real opportunity for dealmakers to focus on acquisitions in Australia, Canada, New Zealand and other middle powers as a strategic link to ‘influence’. While these jurisdictions have always held a relative attractiveness - supported by stable democratic institutions and transparency – the additional benefit of potential influence should not be underestimated in the current environment.
Location of an investment can represent diplomacy as much as risk mitigation. Investments in a country can support an alliance, and as Carney puts it ‘values-based realism’, which is both principled and pragmatic. The focus by companies on investments in middle powers will enable companies to leverage the position of the middle power to ‘maximise their influence, given the fluidity of the world order’.
The focus of these middle powers on industrial policy together with increased productivity, restructuring tax regimes to encourage investment and investment in energy, AI, critical minerals and new trade corridors could provide dealmakers with real dividends through investment. In addition, the comprehensive and strategic alliances many of these middle powers have, will provide companies with access to a broader network and a hedge against zero-sum outcome between hegemons – all the more important in a world where countries can be ‘voted off the island’ unpredictably. In essence, companies will need to adopt their own form of multilateralism by building coalitions through where they choose to invest.
Navigating the new map
The ultimate balance for dealmaking in 2026 will remain caution combined with decisive action. Despite the challenges, we think dealmaking will remain resilient as businesses shift their investment strategies but do not forsake M&A all together. Investment as diplomacy - coupled with deeper insights and analysis - will be key to delivering real impact.
