Transatlantic deal activity has accelerated in the first half of 2026, driven by US buyers seeking European industrial and technology assets, and European strategics accessing US consumer and technology markets. However, the regulatory environment remains the dominant variable—CFIUS, the EU's FDI Screening Regulation, and newly enacted national security regimes in Germany, France, and the Netherlands are reshaping deal timelines and structuring considerations.
Market Dynamics
Cross-border M&A between North America and Europe reached $340 billion in the first half of 2026, a 28% increase year-over-year. Deal count has grown more modestly (up 12%) as average transaction size has increased, reflecting concentration of activity in the mid-to-large cap range ($500M-$5B enterprise value).
The most active sectors in H1 2026 were: Industrial technology (automation, robotics, advanced manufacturing), Healthcare and life sciences (particularly medtech and contract manufacturing), Software and cloud infrastructure, and Energy transition (storage, grid infrastructure, and green hydrogen).
Strategic buyers continue to dominate deal volume, accounting for approximately 72% of transatlantic transactions. Financial sponsors, while active, are facing compressed leverage availability and have shifted toward add-on acquisitions and platform strategies rather than large LBOs in the current rate environment.
CFIUS in the New Administration
The CFIUS regime has entered a more restrictive phase. The reinstatement of mandatory declaration requirements for transactions in covered sectors—semiconductors, AI, quantum computing, defense, and critical infrastructure—is adding 30-45 days to deal timelines on average. We have observed a notable increase in "mitigation agreements" (national security agreements, or NSAs) being imposed as conditions for clearance, particularly on transactions involving European entities with state-affiliated investors or dual-use technology exposure.
Practical implication for buyers: Any US acquisition by a European entity with GCC sovereign fund limited partners, or any entity with operations in countries on the OFAC sanctions list, should be flagged for CFIUS counsel early in the process. Pre-merger conference calls with CFIUS staff, while not eliminating risk, significantly improve clearance predictability.
EU FDI Screening: A Fragmented Landscape
The EU's FDI Screening Regulation remains a coordination framework rather than a supranational review mechanism—enforcement is conducted by member states, and standards vary significantly. In practice, this creates a patchwork where a single transaction may require filings in Germany, France, and the Netherlands simultaneously. Notably, Germany's BMWK (Federal Ministry for Economic Affairs and Climate Protection) has significantly expanded its sectoral definition of "critical" to include agricultural food processing, port infrastructure, and healthcare data platforms.
France's FDI regime, administered by the Treasury, remains one of the most active in Europe. Our experience suggests that healthcare, AI, and defense-adjacent technology filings should expect 3-4 month review timelines, compared to the statutory 30 working day maximum.
Sector Hotspots
Defense & Dual-Use Technology. Transactions in defense-adjacent sectors face heightened scrutiny on both sides of the Atlantic. European-to-US transactions involving aerospace, C4ISR, or advanced materials should anticipate extended review and potential NSA conditions. Similarly, US-to-Europe defense transactions trigger mandatory reviews in France, Germany, and increasingly the Netherlands.
Semiconductors and Advanced Compute. Both CFIUS and the EU have operationalized aggressive screening of semiconductor-related transactions. The EU's Chips Act creates additional EU-level review for transactions above €500M in semiconductor value chains. We see particular risk in compound semiconductor and advanced packaging assets.
Healthcare Data and AI. A new category of regulatory risk has emerged: transactions involving AI systems trained on healthcare data. The EU AI Act, in conjunction with GDPR, creates a layered review environment. We recommend structuring data-related representations carefully and conducting pre-close data governance audits.
Key Takeaways for Investors
- Regulatory timeline: build 6-9 months for cross-border deals involving covered sectors
- CFIUS pre-engagement is no longer optional for transactions with any EU sovereign or quasi-sovereign involvement
- Germany and France are the highest-risk jurisdictions; consider holding structures carefully
- AI/healthcare data transactions require dedicated data governance workstreams
- Insurance products (W&R insurance) can manage deal certainty risk but do not address national security issues
Transaction Structuring Considerations
The regulatory environment is driving structural innovation. We are seeing increased use of carve-outs (acquiring non-regulated portions of targets), hold-separate arrangements (operational separation pending clearance), and reverse bifurcations (partial closings in non-covered jurisdictions). For certain transactions, a pre-emptive minority investment followed by a structured call option has provided a path to full ownership with reduced upfront regulatory exposure.
Exchange rate volatility between USD and EUR remains a structuring consideration, though hedging markets are deep and liquid for major currency pairs. EUR/GBP remains particularly interesting given UK post-Brexit divergence in FDI regimes.