PwC's latest findings reveal that China's merger and acquisition activity reached a record-breaking 7,316 deals in the first half of this year, marking a near 30% year-on-year increase. The total transaction value surged 56% to $241.6 billion, representing the strongest half-year performance since 2023.
The market recovery has been primarily driven by financial investors, with related transaction volumes and values climbing approximately 50% and 85%, respectively. According to Mei Liang, PwC's Tax Leader for Deals Services, the Chinese M&A market is expected to sustain its robust momentum through the second half of 2026, with full-year transaction value projected to achieve year-on-year growth.
Key structural growth drivers include hard technology consolidation, state-owned enterprise reforms, and inter-institutional transfers. Meanwhile, policy support and government-guided funds will continue to facilitate consolidation across strategic industries. The recovery of listed company valuations is also expected to bolster share-swap acquisitions, while the Hong Kong IPO market and tax relief measures are likely to further broaden exit channels and enhance private equity market vitality.
Regarding mega-deals, the number of transactions exceeding $1 billion remained steady at 27, consistent with the same period last year. Among these, domestic strategic investment deals accounted for 14, with over half led by state-owned enterprises. Notably, 10 mega-deals originated from the high-tech sector, primarily concentrated in AI, data storage, and semiconductors.
Financial investors, including private equity and venture capital firms, significantly accelerated their investment pace during the period, with transaction volumes and values skyrocketing 170% and 86% year-on-year, respectively. This period witnessed six mega-deals completed, mainly involving AI and semiconductor sectors.
On the exit and monetization front, overall private equity exit activity declined 9% year-on-year. Although exits via M&A decreased 16%, they still accounted for 70% of total exits, remaining the primary exit route. Concurrently, IPOs providing liquidity and monetization opportunities surged 50% year-on-year, with nearly half conducted on the Stock Exchange of Hong Kong. The exchange recorded 51 PE-backed IPOs in the first half alone, setting a record for the period, with over half being high-tech enterprises.
Chinese enterprises' overseas M&A activity exhibited a distinct "volume decline, value increase" pattern in the first half—transaction numbers fell below the previous year's levels, but average deal sizes expanded significantly. During the period, overseas M&A totaled $20.2 billion across 92 completed transactions, including four mega-deals, surpassing the three recorded in the same period last year. By target industry distribution, healthcare, raw materials, and high technology ranked among the top three in transaction value.