Jaishree Joshi is an LL.M. student (2025-26) at National Law University Odisha. She has previously served as a Judicial Law Clerk at the High Court of Uttarakhand, Nainital. Her research interests include M&A, corporate law, competition law, international trade, and dispute resolution.
In a world where the US/Israel-Iran conflict is spewing its effects over the global economy, M&A volumes are hitting record highs. About $1.1 trillion in deals have been announced in early 2026, which is a surge of 23% from the previous year. This sudden activity is a part of strategic planning. It is because firms use M&A in turbulent times like these to adapt to geopolitical shocks. The abundant capital held by the companies, an AI-led technology race, and regulations that are easy on the investors combine to keep dealmaking robust, securing critical assets and supply lines for a difficult time ahead.
The global economy entered the year 2026 under economic and geopolitical strains. The Iran conflict had effectively blocked the Strait of Hormuz, which is now partially open for the “friendly” nations of Iran. This has caused the “worst-ever disruption in global energy supply”. The price of Brent crude has crossed $100, thus reviving the fears of stagflation (which is economic stagnation combined with inflation, and generally coupled with unemployment). As per a warning of the IMF chief, Kristalina Georgieva, “all roads now lead to higher prices and slower growth”. Normally, in similar stormy times, firms would tread carefully, but instead, the deals only surged. The senior management of companies is reportedly taking a front-footed approach to M&A. They are treating this as a necessity as opposed to a discretionary practice.
I. Why M&A Continues to Flourish Despite Global Instability
There are three systemic factors explaining this counterintuitive surge.
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- Ample liquidity: Years of low interest rates and government policies have left companies and private equity firms with record amounts of cash. This money is often referred to as “dry powder”. Since the prospect of organic growth of the companies is limited, they feel pressure to use it for M&A to widen their circle. In short, cheap money and savings from cost cuts are one of the strongest stimuli for M&A.
- Tech/AI imperative: Rapid shift towards technology means that buying innovation is often faster and less painstaking than building it. For example, U.S. chipmaker Marvell agreed in late 2025 to buy AI-photonics startup Celestial AI for $3.25 billion, acquiring advanced AI-chip technology outright. Many firms similarly acquire software, AI, and automation capabilities through dealmaking.
- Regulatory and policy shifts: Ironically, the rising geopolitical risk, which is the very factor that should discourage M&A, has prompted some governments to encourage the expansion of their big domestic companies using M&A. Investment regulators of different countries have signalled that they would be willing to approve mergers that secure their critical sectors, while keeping sensitive transactions under scrutiny. Boards have interpreted this as permission to consolidate around the world.
Together, these drivers mean that when faced with volatile ripples from geopolitical events, companies with robust balance sheets resort to M&A. They deploy their cash to expand their operations, get hold of technology in place of developing it themselves, and align with the priorities the government seems to be leaning towards at that point. Therefore, it can be said that M&A often becomes a form of “operational hedging” to reduce their own war-induced risks. The reason is that buying a supplier or tech firm abroad is safer than expanding its own operations in a region facing the uncertainties of war. It is because a strong deal, despite or rather, because of the war, will sustain long-term.
II. M&A as a Strategic Response to Geopolitical Risk
It is crucial to point out that the current M&A wave is a strategic adaptation. Companies are using M&A to expand or even relocate their business to countries that are politically stable. Out of those countries, the companies are further choosing the ones that are their political allies to reduce their risks. They are, thus, reshaping their global footprint through deals, reflecting the concept of “friend-shoring”. For example, many Western manufacturers are expanding production in India or Mexico instead of China, often via acquisitions of local plants. Firms in the energy sector and those dealing with raw materials and other industrial materials do the same. The French group Total’s 2021 purchase of a 20% stake in India’s Adani Green is an example of a Western firm securing critical energy assets in an allied market.
This deal, while being aligned with the growth strategy of Total, also supported India’s move towards cleaner energy sources. Likewise, in order to secure their supply chains, automobile manufacturers and tech companies are acquiring or merging with firms in friendly economies.
In effect, M&A is redrawing the map of globalization. Investment flows still cross borders, but increasingly through blocs of trust. We may not be seeing de-globalization per se, but a fragmented globalization: capital flows channel through political blocs. In practice, this is economic statecraft by proxy, i.e., governments set the geopolitical blocs, and corporations make moves via M&A that reinforce those blocs. Over time, major mergers can cement these alignments, thus embedding industry supply chains within the regions where they have their allied governments. This also distributes the risk across various regions, thus making it less concentrated and reducing its impact on a single place of business. Thus, a multinational firm owning factories in both Europe and Asia can weather turbulence, be it in any form, in one region by relying on its assets elsewhere.
III. Resilience or Market Distortion? Assessing the Costs of the M&A Surge
While this M&A boom highlights the swiftness of the corporates in taking action in these trying times, it raises caution flags as well. There remains an underlying fragility in the deals. According to a warning by the IMF, a prolonged conflict will eventually slow the growth evident at this time and keep inflation high. If the war escalates or the world is jolted with yet another shock, the confidence of investors could take a sharp U-turn. This implies that the deal activity surging right now will eventually plummet. The headlines of war created a commotion in the stock markets.
There is an additional concern with the onset of the conflict. There are megadeals being made by giant firms in the same world where certain countries are facing an economic crisis. How are the resources and the benefits supposed to be distributed in a scenario like this? Who wins and who loses? For instance, even as the largest Indian oil companies pursue bulky foreign acquisitions, India’s anticipated growth was recently revised downwards owing to the rising cost of oil. In other words, the prosperity of a corporation outpaced the economic health of a jurisdiction. This gap suggests that we might be witnessing a form of distortion in the market. On the one hand, M&A is thriving, while on the other, a broad “stagflationary” pain looms ahead.
The legal implications of these developments are the tightening of the investment screens in some countries, precisely because of these risks. In the future, deals that are made in the sensitive sectors of a country may face new hurdles, which could dampen this dealmaking momentum.
IV. Conclusion
The global M&A boom during the 2026 crisis is no accident. It reflects a deliberate strategy where firms are using deals to secure supply chains, to be able to access technology, and diversify their geopolitical risks to soften their impact.
This strategically structured M&A is helping the companies to stay afloat when the ocean that surrounds them becomes violent. These transactions reshape globalization into a more fragmented version of itself. Only time will tell whether this growth in the M&A deals depicts genuine resilience or is merely a temporary and unsustainable number. One thing, however, can be stated with certainty. These deals will create a blueprint of how the industries will organize themselves and alliances that will be revealed after the Iran conflict is alleviated. They are a testament to how the markets adapt themselves in times of war to keep their operations running as effectively as possible.
[1] Arasu Kannagi Basil, ‘Dealmaking to Pick Up This Year Despite Iran War Risks, Goldman CEO Says’ Reuters (20 March 2026) https://www.reuters.com/business/finance/ma-activity-accelerate-this-year-despite-war-disruption-goldman-sachs-says-2026-03-20/ accessed 6 June 2026.
[2] Andrea Shalal, ‘War in Middle East Will Lead to Slower Growth, Higher Inflation, IMF Chief Tells Reuters’ Reuters (6 April 2026) https://www.reuters.com/world/middle-east/war-middle-east-will-lead-slower-growth-higher-inflation-imf-chief-tells-reuters-2026-04-06/ accessed 6 June 2026.
[3] Ibid.
[4] Marvell Technology Inc, ‘Marvell to Acquire Celestial AI, Accelerating Scale-up Connectivity for Next-Generation Data Centers’ (Press Release, 2 December 2025) https://investor.marvell.com/news-events/press-releases/detail/1000/marvell-to-acquire-celestial-ai-accelerating-scale-up-connectivity-for-next-generation-data-centers accessed 6 June 2026.
[5] Peter Harper, James Lindop, Claire Morgan and Erasmia Petousi, ‘Remedies’ in Veronica Roberts (ed), Foreign Direct Investment Regulation Guide (1st edn, Global Competition Review 2025) 5.
[6] Mohamed El-Erian, ‘From Near-Shoring to Friend-Shoring: The Changing Face of Globalisation’ The Guardian (9 March 2023) https://www.theguardian.com/business/2023/mar/09/from-near-shoring-to-friend-shoring-the-changing-face-of-globalisation accessed 6 June 2026.
[7] ‘French Energy Group Total Buys 20% Stake in Adani Green’ Forbes Middle East (18 January 2021) https://www.forbesmiddleeast.com/industry/energy/french-energy-group-total-buys-20-stake-in-adani-green accessed 6 June 2026.
[8] Andrea Shalal, ‘Middle East War Means “All Roads” Lead to Higher Prices and Slower Growth, IMF Chief Says’ The Japan Times (7 April 2026) https://www.japantimes.co.jp/business/2026/04/07/economy/middle-east-war-higher-prices-imf/ accessed 6 June 2026.
[9] ‘French Energy Group Total Buys 20% Stake in Adani Green’ (n 7).
[10] Mohamed A El-Erian, ‘Stagflation Is Back’ Financial Times (26 March 2026) https://www.ft.com/content/fe6d2cd9-0e4d-4b84-a882-869a673fcd32 accessed 6 June 2026.
