Five structural forces are pushing organizations toward an M&A capability cliff that is already dividing the market in terms of value creation.

By Gwen Pope, CEO and Co-founder, Tiger Team M&A
Klint Kendrick, Founder, Master Your Merger | Chair, HR M&A Roundtable

In mid-2025, Tiger Team M&A published research documenting what we dubbed the “M&A capability cliff.” Lean teams of two to three people are being expected to execute deal pipelines that previously required eight to twelve. We hoped the data would stabilize as deal markets recovered. Instead, the underlying issues have become more entrenched, creating a clear difference in the value creation achieved by acquirers investing in strategic M&A capability and those who are not.

Global M&A activity surged past $4.8 trillion in 2025, a 40%+ increase over the prior year. Team sizes didn’t recover and budgets didn’t grow. Instead, several reinforcing structural dynamics have converged that make a return to the traditional model of hiring and consulting support unlikely.

This is no longer a cyclical staffing problem awaiting a hiring wave. The data point to a growing structural capability deficit.

At a Glance: What the Data Shows

Metric	Mid-2025	Q1 2026	Trend
Global M&A deal value	$3.4T	$4.9T	40%+ increase
Typical M&A team size	2–3 core (75% decrease)	74% of teams <5 people	50% decrease at low end
Programmatic acquirer advantage	1.7x outperformance	2.1x (McKinsey 2026)	24% increase
M&A share of corporate cash	Declining	7% (Bain 2026)	30-year low
AI-driven headcount suppression	Emerging trend	30% of enterprises capping	30% increase
Entry-level recruiting	Emerging trend	73% decline in junior hiring	73% decrease

Every indicator points in the same direction. Deal volume is rising while execution capacity is shrinking.

Five Dynamics Pushing Organizations Toward the Capability Cliff

1. Deal complexity has structurally increased. Megadeals ($5B+) contributed 73% of incremental deal value in 2025. Sixty percent of those transactions were executed by infrequent acquirers—the companies with the least M&A infrastructure (Bain, January 2026).

2. Budgetary allocation to M&A sharply declined. In 2025, M&A accounted for just 7% of S&P World Index companies’ cash expenditures—the lowest share in 30 years. Capital is being redirected to AI-related capex and R&D.

3. AI-driven headcount mandates add a new hurdle. Thirty percent of enterprises are now limiting future headcount growth specifically because of AI investments (ETR, January 2026). CFOs are prioritizing automation over hiring.

4. The talent pipeline has collapsed. Entry-level hiring rates declined by 73% (Ravio, October 2025). 1.2 million layoffs were announced in 2025, up 58% year-over-year. Much of the distributed M&A expertise built over decades was systematically dismantled during the 2022–2024 layoffs.

5. Force multipliers via AI tooling are still missing for value-creation processes. AI adoption among M&A practitioners is between 45–67%, but solutions are overwhelmingly focused on early-lifecycle activities. Integration planning and execution—where the capability crisis is most acute—remains largely unsupported.

The Perverse Equilibrium

These five dynamics create what we’d describe as a perverse equilibrium. Many organizations can see the capability cliff forming in front of them, yet the system allows deals to keep moving forward as if the drop is someone else’s problem.

Serial acquirers increasingly lean on Big 4 and boutique advisory firms as on-demand band-aids. Since consultancy engagements are temporary by design, the capability cliff becomes steeper. When the engagement ends, the methodology walks out the door. It’s a subscription to dependency that costs more than creating a path to capability.

And here’s the part that should concern everyone: we can’t yet see how bad it actually is. The M&A rebound is recent enough that most deals haven’t reached the critical post-Day 100 proving ground where value creation is actually tested. The harder questions—Does the deal thesis translate? Are synergies being realized? Is integration debt accumulating?—arrive in months 6 through 24.

The Value Creation Chasm

McKinsey’s February 2026 survey of 878 executives illustrates the growing divide. Programmatic acquirers now generate 2.1x the excess total shareholder returns of their peers, up from 1.7x just months earlier. That gap is accelerating, not stabilizing.

Only about 14% of organizations have built the systematic M&A capabilities driving these outcomes. The rest are running on heroics. That model doesn’t scale.

The companies getting this right treat M&A as a repeatable operation, not a series of one-off projects. They invest in capability that compounds across deals. They measure more than five post-merger KPIs and achieve 23% higher synergy capture as a result.

From Capability Cliff to Value Creation Chasm

The M&A capability cliff we documented in mid-2025 hasn’t corrected. Five reinforcing structural forces are pushing more companies to that edge. The result is a widening value creation chasm that separates organizations building systematic M&A excellence from those hoping the next hiring cycle will solve the problem.

It won’t. The hiring cycle isn’t coming. The question facing every acquirer, every PE operating partner, and every chief strategy officer is whether to invest in building M&A capability now, while the advantage can still be captured, or later, when the chasm becomes far more expensive to close.

The data is unambiguous. The window is open. The compounding has already begun.

About the Authors

Gwen Pope is a veteran M&A executive with 20+ years of Fortune 100 experience leading complex transactions. She is CEO and co-founder of Tiger Team M&A.

Klint Kendrick, PhD, SPHR is the founder of Master Your Merger and chair of the HR M&A Roundtable. A former Fortune 50 HR M&A leader, he has supported more than 150 transactions.

Key Sources:

• Bain & Company, “Global M&A Report 2026” (January–February 2026)
• McKinsey & Company, “Global Survey on M&A Capabilities” (February 2026)
• Deloitte, “2026 M&A Trends Survey” (January 2026)
• EY, “CEO Outlook 2026” (Q4 2025)
• KPMG, “2026 M&A Outlook” (Q4 2025)
• DealRoom, “State of M&A 2026 Survey” (October–November 2025)
• ETR, “Enterprise AI Trends 2026” (January 2026)
• Ravio, “Tech Hiring Trends in 2026” (October 2025)
• Challenger, Gray & Christmas, “2025 Year-End Report” (January 2026)