Global merger and acquisition activity slowed sharply in the third quarter as elevated borrowing costs and tighter financial conditions interrupted the dealmaking surge seen earlier in 2026.
Worldwide announced M&A transactions totaled approximately $993 billion during the third quarter, according to LSEG data reported by Reuters.
That represented a 41% decline from the previous quarter and marked the first quarter since the second quarter of 2025 in which global deal value fell below $1 trillion.
The slowdown follows an unusually strong first half of the year, when large transactions and heavy corporate investment helped push acquisition activity higher.
Financing conditions have since become substantially more difficult.
Long-term government bond yields have risen across major economies, increasing the cost of financing leveraged acquisitions and making companies more cautious about paying aggressive valuations for potential targets.
The change is particularly important for private-equity firms, whose acquisition models frequently depend on significant amounts of borrowed money.
Higher financing costs can reduce the returns available from leveraged transactions and widen the valuation gap between buyers and sellers.
Despite the third-quarter decline, global dealmaking remains active in several strategically important industries.
Artificial intelligence infrastructure, energy, technology and critical resources continue to attract corporate investment as companies compete for computing capacity, electricity, supply-chain security and strategic assets.
The broader M&A slowdown therefore does not necessarily indicate that corporate expansion has stopped.
Instead, the financing environment is becoming a stronger filter determining which transactions can move forward.
That distinction will become increasingly important if global bond yields remain elevated.
Companies with large cash balances and strong balance sheets could retain significant acquisition capacity, while highly leveraged buyers may face greater difficulty financing transactions at valuations that sellers are willing to accept.
For investors, the next test will be whether the third-quarter decline represents a temporary pause after an exceptionally strong first half or the beginning of a more sustained slowdown in global dealmaking.
If borrowing costs remain high into the fourth quarter, financing conditions could increasingly determine not only the volume of transactions but also which companies are positioned to take advantage of acquisition opportunities.
