The landscape of startup mergers and acquisitions (M&A) is poised for a significant acceleration in 2026, driven primarily by an intensifying race for critical talent and cutting-edge technology, particularly within the artificial intelligence (AI) and cybersecurity sectors. Following a pivotal 2025 that saw a dramatic surge in the known value of M&A deals, the stage is set for a market where strategic imperatives, rather than merely financial metrics, dictate the pace and size of transactions. This outlook emerges from Crunchbase’s comprehensive 2026 forecast coverage, which also delves into the IPO market and venture investment trends.

For many years, industry observers anticipated a substantial uptick in startup M&A activity, largely attributing this to a bottleneck in the initial public offering (IPO) market. While the "IPO dam" did indeed break in 2025, leading to more companies going public, the expected overwhelming surge in M&A deal count didn’t materialize as predicted. Instead, what emerged was a remarkable increase in the value of these deals, signaling a shift towards larger, more impactful acquisitions.

Globally, 2025 witnessed approximately 2,300 M&A deals involving venture-backed companies, culminating in a collective known deal value exceeding an impressive $214 billion, according to Crunchbase data. It’s crucial to note that this dollar figure is based solely on transactions where a value was publicly disclosed, meaning the actual total value could be significantly higher. Despite the deal count only showing a slight uptick, the sheer magnitude of the known value represents an astounding 91% increase from the $112 billion recorded in 2024, unequivocally pointing to a trend of much larger individual deal sizes.

The United States was a dominant force in this M&A surge, accounting for approximately 73% of all transaction values and 56% of global transactions. In the U.S. alone, known deal value reached $157 billion across nearly 1,300 transactions, a substantial rise from the $79 billion across about 1,100 transactions in 2024. A striking indicator of this trend was the completion of around 37 deals valued at $1 billion or more, as per Crunchbase data, underscoring the prevalence of mega-acquisitions.

Anuj Bahal, the technology, media, and telecoms deal advisory and strategy leader for KPMG US, expressed little surprise at this dual uptick in M&A volume and dollar value. He posited a compelling counter-narrative to conventional wisdom, stating, "A healthy IPO market tends to increase M&A activity rather than reduce it." Bahal explained that many companies adopt "dual-track strategies," preparing for an IPO while simultaneously exploring M&A options. This approach grants them greater flexibility and leverage in negotiations, with the threat of a public offering often serving as a bargaining chip to drive up a startup’s sale price. Furthermore, a robust IPO market creates a new cohort of cash-rich public companies that "immediately look to acquisitions to accelerate their growth," thereby stimulating M&A demand rather than stifling it.

The most prominent example of this trend in 2025 was Google’s staggering $32 billion purchase of cloud security unicorn Wiz. This transaction didn’t just mark the largest acquisition of a private, venture-backed U.S. company for the year; it became the largest ever recorded historically by Crunchbase data, surpassing Meta’s 2014 acquisition of WhatsApp for $19 billion. However, the overall increase in M&A value wasn’t solely attributable to this single monumental deal. Other significant transactions included Naver Financial Corp.’s $10.3 billion acquisition of South Korean fintech Dunamu, and Thermo Fisher Scientific’s $8.87 billion purchase of Clario. Indeed, M&A exit numbers for unicorn companies reached an all-time high in 2025, with 36 such deals totaling $67 billion in value, signaling a significant liquidity event for many high-growth, privately held firms.

Lukas Hoebarth, EY-Parthenon Americas technology sector leader, believes that strategic plays, rather than distressed sales, were the primary drivers behind 2025’s M&A surge. He noted, "Corporations are writing big checks for AI, cybersecurity, data acquisitions, and massive tech and talent deals." What’s particularly striking, Hoebarth added, is the escalating valuation of these deals: "These tech and talent deals used to be worth tens of millions, and now we are in the billions." This phenomenon, often driven by a palpable "fear of missing out" (FOMO), especially concerning advancements in AI, also fueled a flurry of acqui-hires. Hoebarth elaborated on a key trend: "On the one hand, big corporates are snapping up seed/Series A startups for talent and tech — we can call that the AI acqui-hire trend. Many teams with fewer than 100 employees have landed $100 million-plus exits." Concurrently, a segment of "3- to 6-year-old unicorns that stalled on IPO plans is finally selling." Looking into 2026, Hoebarth predicts an increasing focus by acquirers on earlier-stage plays, aiming to capture emerging tech, particularly in high-growth sectors like AI and cybersecurity, before it scales.

Lindsey S. Mignano, co-founder of SSM and a corporate attorney specializing in startups and small businesses, corroborated the trend of more acquisitions occurring at the seed and Series A stages, though she believes the greater value is still transacted at later stages. Mignano explained the strategic rationale: "Acquirers are buying at an earlier stage to speed up to capability rather than build internally, as hiring the same team individually is slower and riskier." She also highlighted the changing mindset of early-stage founders, who are "more willing to sell in light of the current financing environment and the fact that there is less stigma around a really early exit at present." Mignano anticipates this trend will persist unless the financing environment improves more equitably for early-stage companies.

The ultra-competitive environment, particularly in AI and cybersecurity, not only drove acqui-hires but also elevated the role of talent in determining transaction value. Itay Sagie, owner of Israel-based Sagie Capital Advisors, observed a bifurcation in pricing during 2025: "In AI, talent and IP value often dominate, including outsized acqui-hires that would be irrational in other sectors." Conversely, in non-AI tech, pricing remained anchored in traditional revenue multiples and public comparables, heavily influenced by unit economics and operational KPIs. For 2026, Sagie anticipates "greater financial discipline across all sectors, including AI, with stronger emphasis on sustainable P&Ls and defensible unit economics."

KPMG’s Bahal echoed the sentiment that while traditional valuation metrics still play a role, acquisition prices are increasingly dictated by the strategic value of a company’s talent and intellectual property. "This fundamental shift toward valuing people and technology over pure revenue is the new reality in dealmaking, especially as the ‘acqui-hire’ trend accelerates to secure top engineering talent in high-demand fields like AI," he asserted. Unlike Sagie, Bahal believes this trend is not temporary, predicting it "is expected to intensify through 2026 as the war for talent and unique technological capabilities continues to be a primary driver of value."

Beyond the strategic pursuit of talent and technology, M&A activity in 2025 was also significantly propelled by funding challenges. Hoebarth pointed out that a funding crunch was the most common trigger event, with many sectors struggling despite the positive AI narrative. He highlighted that "startup down rounds hit a decade high — about 16% of deals — this year, so rather than accept significant dilution, founders did a pivot to M&A." These down rounds, Hoebarth noted, often get overshadowed by the more buoyant AI discourse. Mignano concurred, identifying a confluence of practical triggers for early-stage founders to sell, including the inability to raise the next funding round on favorable terms, insufficient defensibility of AI technology to secure further funding, and founder fatigue from years of financial strain. Another crucial factor was the capital-intensive "go-to-market" (GTM) build required for expansion and increased revenue metrics, which existing investors were unwilling to fund but a potential acquirer might finance post-acquisition.

Looking ahead to 2026, the trajectory of the M&A market remains intertwined with broader economic health and stability. Bahal outlined a "bull case" scenario fueled by continued digital transformation across industries, a favorable regulatory environment, falling interest rates, and sustained economic growth. These factors would instill confidence in dealmakers to pursue strategic acquisitions, particularly in technology and AI. Conversely, a "bear case" would emerge from an economic downturn, characterized by higher inflation, increased regulatory scrutiny, and elevated geopolitical uncertainty, creating headwinds that would cause both buyers and sellers to pause dealmaking.

Hoebarth’s EY-Parthenon Americas forecasts a modest increase in M&A activity for 2026, though lower than the exceptional growth seen in 2025. U.S. M&A deal volume is projected to grow by approximately 3%, following a robust 9% increase in 2025. Hoebarth’s bull case factors include easing monetary policy, continued lower interest rates, strong corporate balance sheets, significant private equity dry powder, and sustained innovation in high-growth sectors like AI and cybersecurity. His bear case factors encompass an economic downturn, trade and tariff uncertainties, tight funding markets limiting liquidity, and increased regulatory scrutiny, especially in key regions like China, the EU, and the U.K., or geopolitical barriers slowing deal approvals. The "elephant in the room," Hoebarth cautioned, "is still the question of what happens with AI. We do see early signs of a pullback in the AI space, which would have ripple effects far beyond the tech ecosystem."

Sagie believes that if the macro environment "stops getting in the way, M&A activity will take care of itself." He argued that "lower and more predictable interest rates, fewer regulatory surprises, and easing trade tensions would give boards and buyers the confidence to plan again." When such conditions prevail, consolidation returns naturally, not out of desperation, but because "buying becomes a faster and less risky way to grow than building from scratch." Sagie’s bear case is not about technology failure, but "about hesitation." If high rates persist, geopolitical noise continues, or capital markets remain volatile, buyers will slow down. Decisions will take longer, deals will shrink, and only transactions with a very clear strategic rationale will close. The differentiating factor, Sagie concluded, is confidence: "When executives believe they can underwrite the next three to five years with some degree of certainty, M&A moves quickly. When that confidence is missing, even good assets struggle to transact."

In conclusion, the Crunchbase forecast for 2026 paints a picture of an M&A market fundamentally shaped by an intense, enduring race for talent and technology. While economic stability and confidence will temper the overall volume, the strategic imperative to acquire critical capabilities, particularly in AI and cybersecurity, is expected to maintain high deal values and drive strategic plays. The "acqui-hire" trend, the bifurcation of valuation approaches, and the tactical use of M&A to navigate funding challenges will continue to define the startup exit landscape. Whether propelled by growth aspirations or survival necessities, M&A will remain a dynamic and indispensable mechanism for innovation and consolidation in the coming year.