Irish deal makers believe there will be a “tailwind” of merger and acquisition (M&A) activity this year in the event the geopolitical environment calms down, according to a new report from KPMG.

The firm’s M&A outlook, which gathered insights from 150 executives involved in corporate deals, found there has been a softening in appetite for deal-making, down to 77 per cent from the peak of 84 per cent seen in 2025.

Deal makers identified consumer confidence, geopolitical developments and tech valuations as the factors most likely to influence deal activity. Lower consumer confidence in 2025, reflecting the cost-of-living crisis, has “constrained consumer discretionary transactions”.

The report said several themes stand out. The “balance of power”, it said, is expected to “tilt further” toward buyers, driven by heightened scrutiny of targets and longer diligence timelines as investors seek to mitigate risk.

Sellers, however, can “remain confident”, with businesses demonstrating strong quality of earnings still expected to command “robust valuations”, with 90 per cent of deal makers expecting pricing to hold at least steady, a marked increase compared to prior years.

Technology is expected to remain the dominant sector for M&A in the Republic in 2026, with 35 per cent of deal makers identifying it as a key area for activity. This was up from 30 per cent in 2025 and 25 per cent in 2024.

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“This steady rise reflects the continued strength of tech companies globally and the momentum created by AI,” the report said. Healthcare and pharmaceuticals rank second, as energy and infrastructure slip to third, reversing last year’s order.

Expectations for rising valuations have eased in 2026 as market sentiment stabilises following “the exuberance” of 2025.

The technology, media and telecoms sector is expected to deliver “another strong year” of M&A activity, supported by structural growth drivers and a favourable macroeconomic environment.

“Ireland’s position as a key gateway to the EU, supported by its strong talent base, will continue to attract significant inbound investment,” the report said.

“Buyers from the US and UK are expected to remain the most active, with increasing engagement from continental European and other international investors.

“Strategic acquirers will continue to target Irish companies for their innovation, capabilities, and access to European markets, while valuations remain attractive relative to global benchmarks.”

Private equity continues to play a “pivotal role” in Irish M&A, supported by “growing interest” from international investors.

The report said private equity activity is expected to remain robust, driven by “substantial dry powder” and the sector’s ongoing resilience and growth potential.

“We anticipate that private equity investors will increasingly focus on scaling Irish platform investments beyond the domestic and UK markets, with a growing emphasis on expansion into the US,” KPMG said.

Deal makers said “sell-side preparation” will be the key enabler of deal-making this year, rising from third place last year to the top spot.

In contrast, speedy access to finance has fallen to the least important factor, down from second last year, as “longer deal timelines provide buyers more time to secure funding”.

David O’Kelly, partner in corporate finance at KPMG, said: “While confidence has moderated slightly from the buoyant optimism that marked the start of 2025, our survey shows sentiment remains resilient.