China mergers and acquisitions market rebounds in H1, reports by PwC

Number of mergers and acquisitions (M&A) deals in China surged to 7,316 in the first half of 2026, up 30 percent year on year, marking a record high, while total transaction value reached US$241.6 billion (HK$1.89 trillion), according to a report by PricewaterhouseCoopers (PwC) released on Tuesday.

Total transaction value jumped 56 percent to US$241.6 billion, the strongest half‑year performance since 2023, reflecting a clear market rebound. 

Mega‑deals (over US$1 billion each) held steady at 27, matching last year's level. Of these, 14 were strategic deals, 8 of which were driven by state-owned enterprises (SOEs). 10 mega-deals are in the high‑tech sector, such as artificial intelligence, data storage and semiconductors.  

Private equity (PE) deal volume and deal value surged 170 percent and 86 percent respectively year on year, with over 600 technology firms secured financing support. 

In the first half of 2026, Chinese outbound M&A was characterized by lower deal volume but higher average value. The number of deals hit a six-month low, while the average deal value increased significantly. The total value of outbound M&A reached US$20.2 billion, with 92 deals announced, including four mega-deals, up from three in the same period last year.

Lear Mei, deals services tax leader, PwC Hong Kong added that China's outbound direct investment requires multiple approvals depending on deal size and asset type, with negotiations often lengthy.  

On exits, private equity exit activity fell 9 percent, with trade sales decreased 16 percent year on year., though still accounted for 70 percent of total exits. Meanwhile, IPO exits rebound sharply, surged 50 percent year on year, nearly half of the listings completed on the Hong Kong Stock Exchange in the first half of 2026.

PE-backed high-tech companies with over 300 exits via trade sales, followed by industrials and healthcare. 

"We expect China's M&A market to maintain strong momentum in the second half of 2026, with full‑year deal values likely to post year‑on‑year growth," Mei said, "Structural drivers will include hard‑tech consolidation, SOEs reform and inter‑institutional transfers.”

Mei suggested that policy support and government‑guided funds will continue to spur integration in strategic sectors, while recovering valuations of listed firms will underpin share‑swap acquisitions. In addition, Hong Kong's IPO market and tax relief measures will broaden exit channels and boost private equity activity.

Matthew Phillips, financial services industry leader, PwC China added that leading enterprises have the strongest capacity for international expansion and are inclined to pursue larger transactions. By contrast, smaller private firms face difficulties in securing funding and passing regulatory reviews, suggesting the era of frequent small‑scale outbound acquisitions by small and medium-sized enterprises has passed. 

Yu Yan Pui

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