KPMG report forecasts 2026 as the year of the carve-out
A new global survey of 700 dealmakers indicates that 2026 is poised to be a significant year for mergers and acquisitions, driven by a surge in portfolio separations and the integration of AI.
According to the KPMG 2026 Global M&A Outlook, private equity firms are leading the optimistic charge. The data shows that 37% of private equity respondents expect to complete more than five deals in 2026, compared to 20% of corporate dealmakers. Confidence is particularly high in the United States, where organizations report the strongest readiness to transact.
The overall M&A landscape is shifting toward more complex deal structures as organizations navigate geopolitical fragmentation and regulatory volatility. A primary focus for the coming year is the carve-out, where companies spin off specific business units to improve focus and unlock capital.
The rise of carve-outs
The report suggests that 71% of private equity dealmakers are actively pursuing or open to portfolio separation, and 55% already have such transactions under consideration. These moves are largely strategic rather than reactive, as 52% of respondents aim to improve operational efficiency and 42% seek to enhance the valuation of their remaining core businesses.
In this context, carve-outs are reshaping not only how portfolios are simplified, but how value is created and captured across the transaction lifecycle. A carve-out is a strategic transaction where a parent company separates a specific business unit or subsidiary to operate as an independent entity or to be sold to another investor.
While deal appetite is growing, investors are maintaining a disciplined approach regarding transaction size. There appears to be a rebound in mid-sized, execution-intensive deals rather than megadeals.
The vast majority of respondents, including 95% of private equity firms and 83% of corporate entities, expect their next deal to be valued at less than $1 billion. The most common transaction range falls between $250 million and $500 million.
Beyond carve-outs, the primary drivers for these acquisitions include entering new geographical markets and acquiring specific technological capabilities or talent.
The role of AI in deal execution
AI has moved beyond the experimental phase and is now a crucial tool throughout the M&A lifecycle. The technology is enabling analysis that was previously considered too expensive or time-consuming to perform.
The survey found 56% of organizations use AI for due diligence and valuation, while 53% utilize it for deal sourcing and strategy. The efficiency gains are becoming measurable; 17% of dealmakers report that AI has improved valuation modeling and scenario planning by more than 25%.
AI is significantly impacting competitive intelligence and market analysis. More than half of those surveyed report efficiency gains of at least 10% in these areas, with nearly 7% of respondents seeing improvements exceeding 50%. By automating complex tasks like contract reviews and pattern recognition, AI allows firms to manage the rising complexity of modern transactions more effectively.
Navigating execution risks
Despite the technological advantages, there is also a lot of risk because of the complexity of modern deals. Unlike traditional acquisitions, carve-outs and staged transactions require intricate operational disentanglement.
Dealmakers identified several material hurdles to success, with 52% citing operational separation and 43% pointing to valuation complexity. Additionally, IT and data separation remain a concern for 40% of those surveyed.
The report concludes that as the market accelerates, the ability to execute these complicated separations will be the defining factor in whether a deal creates value. Success in 2026 will likely depend on a combination of rigorous execution discipline and the strategic application of AI to manage a volatile global environment.
"Global dealmakers are entering 2026 with growing confidence, but they are doing so in a far more complex environment," said Liz Claydon, Global Head of Deal Advisory & Global Head of Life Sciences at KPMG International.
"Private equity firms are especially bullish, the US is showing the strongest deal momentum, and AI is rapidly becoming embedded across the M&A lifecycle. At the same time, portfolio separation is becoming a core strategic lever, as organizations use carve-outs to sharpen focus, reduce risk and unlock capital for reinvestment. Success will likely depend on execution discipline across valuation, separation planning, technology and talent from day one."
