Asia-Pacific M&A activity fell 11 percent in deal volume and 23.9 percent in aggregate value during the first half of 2026, the only major region to record such declines according to ION Analytics’ Mergermarket data. The region generated 5,171 transactions worth $490 billion in H1 2026, a drop from the previous year. A&O Shearman’s analysis of a separate dataset found a 25 percent decline in deal value to $432.9 billion, while volume fell 6 percent to 8,674 transactions. GlobalData reported a year-on-year decline of approximately 12 percent in Asia-Pacific deal activity, driven by sharp falls in M&A and private equity, even as venture financing saw modest growth.
Resilient Japan
Japan stands apart as the only jurisdiction delivering consistent growth. The country’s M&A value exceeded $84 billion in H1 2026, up 25 percent from the previous six months, while volume rose 7 percent. Inbound M&A reached $15.1 billion across 109 transactions, placing Japan just outside the world’s ten most-targeted markets. PwC’s mid-year outlook captured the paradox at the regional level: Asia-Pacific’s share of global deal volume rose to 37 percent, supported by activity in China, Japan and parts of Southeast Asia, but its share of deal value fell to 16 percent, reflecting fewer megadeals and smaller average transaction sizes than in the Americas and EMEA.
Deloitte’s Asia-Pacific divestiture outlook identified Tokyo Stock Exchange rules on capital-efficiency disclosures as a key driver of divestments and take-private transactions. Norton Rose Fulbright expects the trend to continue, with governance reforms and exchange pressure encouraging portfolio streamlining and carve-outs, and creating a pipeline of businesses and assets for private equity. Activism has scaled alongside deal flow. Diligent Market Intelligence’s Corporate Governance in Asia 2026 report found that Japan remained Asia’s activism hotspot, accounting for 56 percent of regional activity in 2025 and 32 percent in Q1 2026.
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Activists won 37 board seats at Japan-based companies in 2025, up from seven in 2024 and 23 in 2023. FTI Consulting pointed to the standoff at Seven & i Holdings as an inflection point: the board had to weigh a hostile Canadian bid against a domestic privatisation plan, illustrating that Japan’s modern M&A Guidelines no longer treat protecting management as a valid defence against a superior offer.
Japan’s regulatory environment continues to adapt. Tender offer rules effective from May 1, 2026 lowered the principal threshold for mandatory tender offers from one-third to 30 percent, aligning it more closely with international standards and actual voting practices at listed companies. These changes coincided with an increase in contested approaches: unsolicited tender offers rose from four in 2024 to seven in 2025, including YAGEO’s successful bid for Shibaura Electronics after a competitive process.
However, not all initiatives have proceeded smoothly. In April 2026, the Japanese government issued a recommendation under the Foreign Exchange and Foreign Trade Act that an MBK Partners-affiliated vehicle discontinue its contemplated $1.8 billion take-private of machine-tool manufacturer Makino Milling Machine, citing national security concerns. Legal commentary described it as the first formal discontinuance recommendation under the regime. For dealmakers and counsel, the episode is a reminder that Japan’s opening to foreign capital remains bounded in strategically sensitive sectors.
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Greater China’s Sharp Reversal
China staged a genuine rebound in 2025 only to see momentum reverse sharply in the opening months of 2026.
The scale of last year’s recovery was substantial. PwC found that China’s M&A market recorded more than $400 billion in disclosed deal value in 2025, up 47 percent year-on-year, while volume exceeded 12,000 transactions, an increase of nearly 20 percent. The recovery was overwhelmingly domestic and policy-directed: domestic strategic investments accounted for 3,639 transactions worth a combined $239 billion, up 83 percent year-on-year. More than half were led by state-owned enterprises, with a strong focus on strategic industries including semiconductors, artificial intelligence and new energy.
That trajectory did not survive the geopolitical shocks of early 2026. A&O Shearman recorded a dramatic pullback: Chinese mainland’s deal value fell by around 40 percent from H2 2025 to $133 billion in H1 2026, while volume declined 8 percent to 2,985 transactions. Hong Kong activity fell to $10.7 billion in the period to 11 June, almost 70 percent below H2 2025.
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Inbound M&A value stood at $11.4 billion, down 31 percent from the previous half-year, as international private-capital providers retreated amid geopolitical pressure and a less attractive risk-return profile for Chinese assets. A&O Shearman noted that Middle Eastern investors, particularly sovereign wealth funds, remained one source of continuing capital, and observed signs of renewed investment in Greater China’s technology and life-sciences platforms. White & Case’s tracking similarly found that, after financial services and industrials led deal value in 2025, activity in Q1 2026 pivoted towards life sciences and technology, media and telecommunications.
Buyer composition is also changing. A&O Shearman pointed to the growing influence of domestic Chinese financial sponsors and the accelerating international expansion of Chinese corporates. EY’s H1 2026 data showed that Chinese enterprises announced $21.4 billion of overseas M&A, up 3.6 percent year-on-year, although deal numbers fell 13 percent to 191, remaining subdued by historical standards. Hong Kong’s capital markets continued to provide key exit liquidity even as deal activity softened. PwC recorded 70 IPO exits on the Hong Kong Stock Exchange in 2025, a record high. Its latest 2026 forecast, issued in July, projected at least $380 billion Hong Kong dollars in IPO proceeds for the full year.
