Executive summary

Global M&A rebounded sharply in 2025, with deal activity accelerating on the back of stabilising interest rates, renewed board confidence and a resurgence of large‑cap transactions, especially in technology and select healthcare subsectors. In Switzerland, cross‑border dealmaking remained the defining feature in M&A: TMT led by deal count while Pharma/Life Sciences drove value, with Swiss buyers particularly active abroad.

On the regulatory front, three developments are to be observed:

  • Switzerland’s forthcoming Investment Screening Act (ISA);
  • The EU’s Foreign Subsidies Regulation (FSR) with its 2026 guidelines; and
  • The EU digital/AI regimes (DMA and AI Act) that can add reviews, disclosures and timing risks for M&A transactions.

In order to reduce execution risks and keep valuation discipline in M&A transactions, the use of earn‑outs, equity rollovers and reverse break/ticking fees can bridge prices while preserving commitment and motivation. Boards and deal teams need to show stamina throughout the negotiation process and be open to use the entire M&A toolbox to cater for volatile market environments and fast changing regulatory environments. Sticking strictly to outdated M&A playbooks and impatience by team members are key dealbreakers in the current market environment.

Where the M&A market stands

Global picture: Scale and strategic repositioning

2025 marked a decisive turn in M&A activity: reported global deal value and volume reached multi‑year highs, with megadeals accounting for a growing share as boardrooms leaned back into scale and strategic repositioning. Leading strategy advisors and banks expect M&A to stay central to transformation agendas in all sectors throughout 2026, with AI and portfolio realignment as dominant themes.

Switzerland: Technology and Healthcare/Life Sciences as key drivers

Swiss dealmaking remained resilient and outward‑facing: nearly half of all Swiss‑related deals involved Swiss acquirers buying abroad, TMT led by count, and Pharmaceuticals & Life Sciences by value, consistent with Switzerland’s innovation profile. In particular, technology deals are being reshaped by the AI infrastructure race, data governance obligations, and digital‑platform regulation in the EU.

We expect this trend to continue further as Zurich is developing rapidly into a European cluster for technology companies. Greenfield operations and university spin-offs as well as leading technology companies, such as Google, Meta or IBM are creating a central European hub for IT companies. Independent outlooks flagged a cautious‑optimistic 2026 M&A trajectory in Switzerland, with inbound transactions still robust despite the Swiss currency strength.

Three regulatory shifts a cross‑border deal must plan for 

Switzerland's Investment Screening Act (ISA) 

The Swiss Parliament adopted the Investment Screening Act (ISA) on 19 December 2025 with a focus on state‑controlled foreign investors (state bodies, state-controlled companies or persons acting on their behalf) in critical sectors such as defense, energy and infrastructure, if certain turnover thresholds are met. The Swiss State Secretariat of Economic Affairs (SECO) is introduced as review body, whereas the Federal Council remains the right to exempt acquisitions by foreign state investors from certain countries from the approval requirement. The entry into force is expected no earlier than 2027. From a M&A perspective, it is noteworthy that the scope is narrower than many FDI regimes abroad and ties the control definition to Swiss merger control concepts, therefore improving predictability.

EU Foreign Subsidies Regulation (FSR)

The EU Foreign Subsidies Regulation (FSR) has become a third pillar of European deal control alongside EU/national merger control and FDI screening, adding a mandatory pre‑closing notification for qualifying M&A transactions where parties have received significant foreign financial contributions (FFCs). The FSR is empowering the Commission to call in or investigate deals ex officio below thresholds. For M&A transactions, this means more information gathering, parallel filings and long‑stop date pressure, especially for buyers with state‑links or complex global financing. The Commission’s Guidelines issued on 9 January 2026 clarify aspects of the substantive assessment, but also confirms broad enforcement discretion. Hence, deal teams should map FFCs early, take FSR timing into CPs, and align remedies strategy across all regimes.

EU digital & AI regimes (DMA; AI Act)

The EU’s Digital Markets Act (DMA) and AI Act together set a new rulebook for scaling digital platforms and deploying AI in Europe. The DMA imposes obligations on designated “gatekeepers” to ensure fairness and contestability and is actively monitored through regulatory dialogues and non‑compliance investigations. Acquirers of platform businesses should expect access, self‑preferencing and interoperability duties to influence both diligence and integration.

In parallel, the EU Regulation on Artificial Intelligence (AI Act) entered into force on 1 August 2024, with prohibited practices and AI‑literacy requirements applying from 2 February 2025, and governance/GPAI provisions phasing in from 2 August 2025 toward broader application by 2026/27. The AI Act results in making AI risk management, data provenance and documentation core items in transaction planning and post‑merger compliance.

Deal execution & timing: commitment under pressure when valuation gaps persist

Boards and deal teams are operating in a market where process discipline and timetable realism can be the difference between value creation and value leakage. Execution risk today is shaped by valuation gaps, multi‑track regulatory reviews (merger control, national FDI, FSR) as well as a financing backdrop that has improved but remains sensitive to macro-economic shocks.

Disagreement on valuation is the most common reason why deals stall or are reevaluated. Historic multiples, volatile interest rates, shifting regulatory timelines and uneven sector outlooks make it harder to lock a price early and maintain commitment through to closing. The following M&A tools help bridge the gap while protecting deal execution.

Economic tools to bridge the gap
  • Earn‑outs/Contingent Value Rights linked to objective metrics (revenue, EBITDA, regulatory/clinical milestones) with clear calculation mechanics, audit/cooperation rights, caps/floors and dispute resolution routes.
  • Equity rollover and seller reinvestment to align incentives and reduce upfront cash consideration.
  • Completion accounts vs locked‑box: use completion accounts where volatility is high; tightened leakage definitions and interest on leakage under locked‑stock consideration with symmetrical walk‑away rights to manage public‑market volatility.
  • Vendor loans or PIK instruments to defer part of consideration while preserving headline value.
Legal & process levers to protect execution
  • Reverse break fees sized to regulatory risk; staged ticking fees to compensate for elongated review.
  • Material Adverse Change (MAC) / Material Adverse Effect (MAE) drafting focused on target‑specific performance (excluding general macro/rate moves) to reduce re‑trade risk.
  • Remedy packages and covenants with escalation and divestment parameters to avoid deadlocks.
  • Interim‑operating covenants balanced against business agility; information rights to monitor KPIs that drive variable consideration.
  • Long‑stop extension mechanics are tied to objective regulatory milestones rather than open‑ended discretion.
Warranties & Indemnities and due diligence to defend value
  • Align SPA and W&I policy (survival, exclusions, notice periods) to avoid coverage gaps when earn‑outs are at stake.
  • Run focused QoE, tax and cyber/AI due diligence to confirm the valuation model. Connect the findings to specific price‑adjusters or indemnities.

Board stamina: stay the course and be creative

The current M&A market environment is characterised by non-traditional playbooks and non-linear timelines. Processes stop and start. Valuation expectations diverge. Regulatory reviews lengthen and multiply. For boards and deal teams, an M&A transaction process requires discipline and stamina as well as creativity paired with experience. Lack of these behavioural patterns result in deal stalls and transaction abortions. It is crucial to overcome deal fatigue driven by the ability to use the entire M&A toolbox.

A typical board playbook to cater for non-linear, stop-start M&A transactions includes, among other things, the following:

  • Empower speed: Pre‑approve the strategic rationale, value thesis, and risk appetite of a transaction (antitrust/FDI, sanctions, cyber, ESG, HR).
  • Replace linear timelines with multi-path plans.
  • Establish a steering committee that can green‑light tactical moves (e.g., shifting from cash‑only to earn‑out, or activating a remedy package for regulators) without reconvening the full board.
  • Pre‑approve a price‑band and the menu of give/gets (earn‑out ranges, rollover %, fee levels) to accelerate negotiations without re‑opening the deal thesis.
  • Set a formal cadence for decision gates (post‑DD go/no‑go; pre‑filing; post‑Phase I/II; financing CPs).
  • Post signing: maintain a single‑voice communications plan (employees, customers, regulators) to protect asset value during elongated reviews.
  • Draft SPA’s for certainty and flexibility: limit conditions precedent to what is necessary (regulatory, carve-out steps and critical consents) and do not overengineer the interim covenants to keep operational flexibility.

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