AI likely to drive global technology transactions in 2026
Deal volumes declined while values increased, despite regulatory challenges across major markets
Technology, media and communications (TMC) transactions in 2025 demonstrated a clear shift toward quality over quantity, with fewer deals but significantly higher average values. This selective approach reflected the broader market trend favouring strategic, high-value acquisitions which had begun to be formed in 2024.
While TMC deal activity remained healthy throughout 2024, market sentiment was shifting. Inflationary pressures, rising commodity prices, international conflicts and an evolving regulatory environment contributed to growing buyer caution. Although transactional momentum remained steady – particularly across pan-European deals and cross-border activity from US-based investors – enthusiasm was tempering compared with the sharp rebound in 2021 and 2022.
This caution was reflected in deal structures. Parties increasingly turned to completion account structures rather than locked-box mechanisms. Valuation gaps between buyers and sellers became more visible in 2024, prompting wider use of deferred consideration and earn-outs to bridge expectations.
Distressed M&A activity began to rise, as businesses under pressure sought strategic exits or cost rationalisation opportunities. Buyers became more selective, placing greater emphasis on verifiable fundamentals and structural resilience rather than speculative growth narratives.
Then, the first quarter of 2025 delivered a sharp recalibration, accelerating the 2024 trend. Early shocks (tariff announcements, stock market volatility and geopolitical tensions) disrupted deal processes and forced reassessment of risk appetite.
What emerged was refocus rather than retreat. Buyers remained active in 2025 but tightened investment priorities further around businesses demonstrating operational rigour, digital scalability and sector durability. Some reduction in deal volumes (although not deal values) reflected investors moving from tech towards industries less exposed to trade frictions.
Technology Dealmaking and Investment: Market Themes and Outlook
Client success story
Osborne Clarke advised Vodafone Romania S.A., a subsidiary of Vodafone Group, on the acquisition of Telekom Romania Mobile Communications S.A. (TKRM) from Hellenic Telecommunications Organization S.A. (OTE). The transaction involved Vodafone acquiring TKRM and its post-paid customer base, together with additional spectrum and towers, significantly strengthening Vodafone’s infrastructure and market position in the Romanian telecoms sector. In a parallel transaction, Digi Romania S.A. agreed to acquire TKRM’s pre-paid customer business, adding further complexity and coordination requirements.
This cross-border deal required integrated support across corporate, commercial and tax disciplines, with Romanian law advice provided by local firm Țuca Zbârcea & Asociații. Osborne Clarke’s team was led by Partner, Mark Wesker, with involvement from specialists across our UK offices to manage the multi-jurisdictional and regulatory aspects of the transaction.
This strategically important acquisition reflects both the fast-evolving nature of the European telecoms market and Vodafone’s growth ambitions in Romania. It also demonstrates Osborne Clarke’s capability in delivering complex, multi-faceted M&A deals, drawing on deep sector expertise and cross-practice collaboration to support clients on high-profile international transactions.
Subsector trends
Technology sector developments
The technology sub-sector was extremely active in dealmaking and the various types of technology attracting investment are as described above. However, the hottest topic in 2025 was undoubtedly artificial intelligence.
"AI in Everything" was a significant trend in 2025, with corporate transactions following this trend but with changed focus. While investors still funded experimental technology with large values, artificial intelligence investment shifted to practical infrastructure. Companies moved from developing basic AI models towards building essential supporting systems: data centres, power networks, fibre optic cables and software platforms. Businesses now view securing AI as essential for competitiveness. A substantial share of new unicorns were AI startups.
Buyers are now looking beyond whether artificial intelligence is present in a business model: they are assessing how it is deployed and what risks or advantages it creates.
Technology companies like chipmakers, semiconductor, telecoms and media companies are buying AI-related businesses while divesting non-core operations and freeing capital for AI investment.
The acquisition of talent has become particularly prominent, where companies are acquiring not only technology but also the scarce talent needed to develop and deploy artificial intelligence solutions. Europe's talent advantage (higher per-capita AI expert concentration than the US) has made European AI companies particularly attractive acquisition targets.
Major technology companies spent record amounts on AI. US companies led this spending globally, with tech giants greatly increasing AI investments. This created demand for AI infrastructure, computer chips and specialised software. The market saw billions invested daily in AI research, data centres, joint ventures and acquisitions.
There have also been a number of professional services (accountancy, law) and managed service provider investments by PE investors in Europe, as those investors sought to acquire many small businesses. These types of business need injections of capital to deal with the advent of AI and the transformative impact it will bring to their future profitability.
However, caution is emerging regarding AI; many major AI companies have created risky financial interdependencies while most have achieved zero return on investment (ROI) despite huge spending on generative AI initiatives. Breakthrough innovations in semiconductors or quantum computing could instantly render billions in current data centre infrastructure obsolete, similar to fibre-optic overbuilding during the dot-com bubble. Towards 2025's end, the media buzzed with bubble-bursting predictions alongside reports of record stock market highs from bullish AI company valuations. 2026 may see market correction affecting dealmaking.
Media sector consolidation
The sector saw strong growth in deal size in 2025, backed especially by a handful of mega deals, but a decline in deal volumes indicating a market focused on larger strategically significant transactions.
In media (as in wider tech M&A) timetables have become extended this year with fuller due diligence the norm. The media sector has been balancing stability and disruption as innovations (including AI in content creation and advertising optimisation, social commerce and the consumer shift away from traditional broadcasters) gather pace.
Brand companies are highly desirable, with buyers rewarding firms sustaining differentiation through creativity, client relationships and proven growth. Where AI is levelling functional capabilities, value lies in what cannot be easily replicated. Experiential entertainment targets are attractive and many media deals related to gaming. While streaming services remain popular due to regular income streams, platform deals have slowed, with focus shifting to regional reach and lifestyle relevance.
Communications infrastructure investment
Large deals in this sub-sector have resurged as operators face pressure to achieve scale and consolidate. Consolidation helps telecoms providers meet high capital expenditure for 5G and fibre rollouts. Communications companies are also acquiring AI capabilities and divesting non-core assets such as international holdings.
Cross-border dealmaking patterns emerge
US investors are central to the TMC story. Spending by large US cloud businesses catalyses non-domestic acquisitions of, and investment in, data centres and fibre. US private equity remains active in European and Asian take-privates and carve-outs, particularly in cybersecurity, vertical SaaS and infrastructure software, while US strategics selectively acquire overseas AI capabilities and talent.
Europe and Asia are responding with sovereignty initiatives: the substantial EU InvestAI programme and similar UK initiatives are being launched to attract more investment.
Tech deals, particularly those at the larger end of the spectrum, have faced regulatory headwinds over the last few years, but the US has become friendlier to larger deals from a competition and merger control standpoint, which may explain the increase in larger deals involving US players.
Deal execution faces new challenges
Technology, media and communications dealmaking presents unique challenges that require sophisticated solutions and careful navigation. The most common pressure points across technology mergers and acquisitions, private equity and venture capital include regulatory complexity, data governance, infrastructure constraints, trade tariffs and talent retention.
Infrastructure and power constraints
Power availability, grid connection timelines, permitting and heat reuse obligations can stall data centre and edge computing deals. Environmental, social and governance (ESG) diligence scrutiny rises on energy-intensive AI.
Data rights and portability
Key considerations include lawful basis for processing and repurposing, data portability and access requirements, cloud switching and egress fees, data residency and cross-border transfers.
Talent retention
AI talent scarcity makes retention deal-critical, with brain drain to US tech giants offering higher salaries presenting significant challenges for non-US acquirers. Incentivisation offerings need careful consideration and restrictive covenants careful drafting. Due diligence on personnel and succession planning should be robust.
Regulation and compliance
New regulatory frameworks for AI and cybersecurity create complex compliance obligations around classification, risk management, transparency and documentation. Enhanced operational resilience requirements and data protection rules are tightening, while antitrust authorities focus on TMC industry mergers, especially data ecosystems. Foreign direct investment (FDI) screening covers critical technology sectors including semiconductors, quantum computing, AI, telecommunications and security software. In the EU, the Economic Security Roadmap will tighten FDI rules further.
Enhanced due diligence processes must address AI model provenance, training data licences, intellectual property ownership, open source compliance, safety testing and documentation standards. Regulatory approvals must be built into timelines or alternative routes pursued to ensure deal completion.
Tariff exposure
Potential substantial tariff exposure for TMC creates additional complexity, especially for cross-border transactions. Dealmakers should consider exposure and risk mitigation through due diligence. Investors may pivot from hardware towards sub-sectors less exposed to tariff risks.
Global TMC dealmaking shows resilience as AI drives investment
TMC transactions in 2025 showed strategic recalibration, with AI emerging as the dominant investment theme across all deal types. Deal execution required enhanced due diligence, complex regulatory navigation and careful talent retention. Cross-border activity remained robust despite geopolitical tensions, with US investors driving significant flows into European and Asian markets.
Looking towards 2026, regulatory clarity around AI frameworks will be crucial for transaction structures. Potential market correction in AI valuations may create opportunities for strategic acquirers, while digitalisation, automation and cybersecurity remain compelling investment themes. If the AI valuations prove too optimistic, there will be less competition for targets in the sector, and more potential for bargains to be struck.
The sector is likely to see robust dealmaking continue in 2026, with larger strategic transactions as financing stabilises, and premium valuations for companies that can demonstrate competitive advantages and proven performance.
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Co-head International Corporate Group, Partner, UK
Knowledge Lawyer Director, UK
Co-head International Corporate Group, Partner, Germany
Head of Business Transactions Knowledge, UK
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