Navigating the new landscape of cross-border M&A: insights and strategies

Despite ongoing geopolitical tensions and economic uncertainty, a wave of optimism is sweeping through the M&A community. Deal makers are increasingly confident that 2025 and 2026 will mark a significant uptick in cross-border transaction activity. This renewed enthusiasm comes not from the disappearance of challenges, but from a fundamental shift in how market participants approach deal making in an era of persistent complexity.

The return of deal making confidence

After a prolonged lull in M&A activity through 2024 and early 2025, both markets and deal makers have accepted the reality of the new deal making environment. Rather than waiting for conditions to stabilize, companies are now viewing uncertainty as an opportunity rather than a barrier.

The extended gap in M&A transactions has created pent-up demand that can no longer be ignored. Companies recognize they cannot indefinitely postpone strategic moves while waiting for perfect conditions that may never materialize.

Key drivers fueling cross-border activity

Several stabilizing factors are converging to create favorable conditions for cross-border M&A.

Financial market stabilization

Interest rates have stabilized, and the cost of capital has been priced into deal valuations. While financing costs remain higher than in previous years, the predictability allows for more confident deal structuring.

Closing valuation gaps

Where valuation differences persist between buyers and sellers, market participants are increasingly willing to employ alternative structures:

• Joint ventures that allow shared risk and reward
• Earnout provisions that bridge valuation disagreements
• Founder rollovers where sellers maintain equity stakes
• Holdback mechanisms that tie payments to performance

These creative approaches have proven successful in finding pathways to completed transactions in an uncertain environment.

Private capital deployment

Private equity firms are sitting on substantial dry powder that needs to be deployed. This capital overhang is creating pressure to execute transactions despite challenging conditions.

Portfolio repositioning

Corporate buyers continue to reshape their portfolios, divesting non-core assets through carve-out transactions while acquiring businesses that strengthen strategic positioning.

Succession planning pressures

Many founders lack clear succession plans, creating a natural supply of businesses entering the market for acquisition.

Activist influence

The rise of shareholder activism is pressuring companies to focus on core competencies rather than maintaining conglomerate structures. This activism is driving both divestitures and strategic acquisitions as companies preempt activist demands.

Geopolitical tensions as deal catalysts

Paradoxically, geopolitical tensions that once paused deal activity are now forcing transactions. Companies are using M&A as a strategic tool to navigate geopolitical complexity rather than waiting for tensions to resolve.

Supply chain resilience

Disrupted supply chains have prompted companies to invest in derisking their business models. Rather than maintaining over-reliance on individual markets, companies are acquiring assets that diversify geographic exposure and create supply chain certainty.

Friendshoring and nearshoring

Capital and investment are shifting toward allied nations and countries with aligned values. This geographic reorientation is creating M&A opportunities as companies establish presence in strategically important markets closer to home.

Growth through acquisition

The pause in deal activity during 2024 resulted in limited organic growth for many companies. With geopolitical tensions showing no signs of abating in the short to medium term, companies are accepting that growth must come through M&A that acknowledges and navigates around geopolitical realities.

The evolving regulatory landscape

The regulatory environment for cross-border M&A has undergone significant transformation, presenting both challenges and opportunities for deal makers.

Merger control progress

The merger control regime has improved from its most challenging period in 2023 and early 2024. Key jurisdictions including the United States, Europe, and the United Kingdom have adopted more pro-deal mentalities, recognizing that overly restrictive merger control was hampering economic growth.

Rules have become clearer and more predictable, allowing clients to navigate the process more successfully.

Foreign direct investment complexity

While merger control has stabilized, foreign direct investment (FDI) regimes have become increasingly complex. Originally designed to protect strategic assets and defense interests with limited scope, FDI regimes have expanded dramatically.

• Expanded scope into sectors previously considered routine
• Proliferation of regimes across major capital markets
• Increased complexity with unique rules in each jurisdiction
• Unpredictable outcomes from opaque review processes
• Extended timelines for deal completion
• Heightened scrutiny across multiple jurisdictions simultaneously

Strategic approaches to regulatory navigation

Despite regulatory complexity, there remains willingness in most major capital markets to see deals completed. Success requires strategic preparation and expert navigation.

Early analysis and preparation

The foundation of successful cross-border deals is early understanding of applicable rules and regimes. Companies should:

• Conduct preliminary desktop analysis of M&A pipeline targets
• Assess regulatory requirements across relevant jurisdictions
• Identify potential clearance challenges before entering formal processes
• Engage advisors early to map regulatory pathways

Stakeholder communication

Ensuring key stakeholders understand potential risks and clearance processes is essential. Transparency about regulatory timelines and requirements helps manage expectations and maintain deal momentum.

Solution-oriented advice

Deal makers want advisors who help them get to “yes” rather than simply cataloging problems. The most valuable counsel applies experience to explain risks while identifying pathways to completion.

Sector and geography considerations

Not all deals are equally feasible under current regulatory regimes. Certain combinations of buyer nationality, target sector, and geography will not receive clearance under either merger control or FDI rules.

However, the regulatory landscape is dynamic. Deals that would have been impossible three or four years ago may now have viable pathways to completion as countries compete for investment, while previously routine transactions may now face unexpected scrutiny.

Information access and local expertise

Deal makers can conduct meaningful preliminary analysis using publicly available information combined with their own business data. This desktop analysis provides a rough guide to regulatory feasibility for pipeline targets.

Deeper assessment, however, requires data from the target company once a formal process begins.

Early council-to-council engagement

To facilitate thorough regulatory analysis while protecting confidentiality, there is increasing use of early council-to-council data sharing. This allows:

• Sellers to avoid entering deals with buyers unlikely to obtain clearance
• Buyers to avoid investing time in processes where regulatory challenges will prevent selection
• Both parties to structure deals appropriately from the outset

The role of local advisors

Local expertise remains invaluable for navigating jurisdiction-specific nuances in regulatory regimes. Cross-border deals benefit from coordinated teams that combine global experience with local knowledge.

Negotiation dynamics and deal protection

The regulatory environment significantly impacts deal negotiations and contractual protections.

Seller priorities

Sellers consistently prioritize deal certainty. They will not proceed through an entire process only to face unnecessary risk of non-completion. This creates several dynamics:

• Buyers must demonstrate regulatory clearance capability to enter competitive processes
• Regulatory challenges can be offset by higher purchase prices
• Faster regulatory timelines provide competitive advantage when pricing is comparable

Buyer strategies

Buyers facing regulatory hurdles can enhance their competitive position through:

• Premium pricing to compensate for longer timelines
• Lighter contract terms on non-regulatory issues
• Regulatory risk assumption through “hell or high water” clauses
• Remedy commitments to facilitate clearance

Contractual protections

Deal agreements increasingly include sophisticated provisions addressing regulatory risk:

• Remedy frameworks defining acceptable behavioral or structural remedies
• Economic adjustments such as break fees or price increases tied to clearance timing
• Process rights including seller participation in regulatory discussions
• Deal protection limiting buyers from pursuing conflicting transactions

Building effective client relationships

Successful navigation of complex cross-border deals requires strong advisor-client relationships built on trust and understanding.

Understanding client drivers

Advisors must invest time understanding:

• The strategic rationale driving the transaction
• The client's business model and competitive position
• Internal dynamics and stakeholder priorities
• Non-negotiable requirements specific to the organization

Honest risk assessment

The best advisory relationships enable candid conversations about risk, risk appetite, and how challenges need to be communicated internally and reflected in deal terms.

Client-centered approach

Effective advisors focus on helping clients achieve their desired outcomes rather than imposing their own views. This client-centered approach is essential for identifying which negotiation levers to pull.

Case study: embracing complexity for strategic gain

A powerful example of successfully navigating regulatory complexity involved Seeker's acquisition of NBCC, a chemicals business from Lonza. The deal was signed at the tipping point when regulatory scrutiny was intensifying dramatically.

Upon filing, six major global regulators raised significant issues. The client faced a choice: walk away or embrace the complexity because the strategic value justified the effort.

They chose complexity. Through sustained engagement with all six regulators, the team executed a carve-out of a business they did not yet own across 70 countries, identified a remedy buyer, and closed every aspect across all markets in a single day.

This transaction demonstrates that unwavering ambition combined with acceptance of complexity creates the best outcomes. This mentality is exactly what the market needs to recapture momentum lost during the 2024 slowdown.

Practical guidance for cross-border deal makers

As companies build their M&A pipelines for 2025 and beyond, several practical recommendations emerge.

Start planning now

Begin preliminary regulatory analysis of potential targets immediately. Understanding the regulatory landscape for your M&A pipeline allows you to identify both challenges and unexpected opportunities.

Price in complexity

Factor tariffs, regulatory timelines, and compliance costs into valuations from the outset. Markets have already begun pricing these factors into deals.

Embrace alternative structures

Be open to joint ventures, earnouts, and other creative structures that bridge valuation gaps and allocate risk appropriately.

Invest in relationships

Build relationships with advisors who understand your business, your strategic objectives, and your risk tolerance. The best deals emerge from these trusted partnerships.

Focus on getting to yes

Approach transactions with the mindset of finding pathways to completion. Work with advisors and counterparties who share this solution-oriented approach while remaining realistic about limitations.

Communicate transparently

Keep stakeholders informed about regulatory processes, timelines, and risks. Transparency builds confidence and maintains momentum through extended clearance periods.

Looking ahead

The cross-border M&A landscape of 2025 and 2026 will be characterized by activity, not paralysis. Deal makers have moved beyond waiting for perfect conditions and are actively pursuing strategic transactions that drive growth and competitive positioning.

Regulatory complexity remains real, but it is navigable with proper preparation, expert guidance, and creative deal structuring. Geopolitical tensions, rather than stopping deals, are now catalyzing transactions as companies reposition for resilience.

The companies that will thrive are those that accept the new reality, invest in understanding the regulatory landscape, and maintain unwavering ambition to complete strategically important transactions. The opportunity exists for those prepared to navigate the complexity.

For deal makers ready to engage, the message is clear: the time for cross-border M&A is now. With the right preparation, the right partnerships, and the right mindset, 2025 and 2026 can mark a significant resurgence in strategic deal activity that drives growth and creates value in an era of persistent complexity.