Investing in Southern Europe: why it is emerging as the most attractive destination for international investors

Southern Europe continues to strengthen its position as a leading destination for mergers and acquisitions, combining economic resilience, political stability and a broad pipeline of investment opportunities. Despite a modest decline in deal volume during the first half of 2026, total announced deal value surged by 37% year-on-year to €147.7bn, highlighting sustained investor confidence and the presence of larger, transformative transactions.

The region's attractiveness is underpinned by three key factors: a robust and often undervalued mid-market, a large population of family-owned businesses entering succession phases, and valuation multiples that remain competitive compared with Northern Europe and the United States.

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Key figures

€147.7bn

Total announced M&A value in Southern Europe in H1 2026

1,858 deals

Announced across the region during H1 2026

41% value

Generated by inbound investors from outside Southern Europe

Southern Europe is emerging as one of the most attractive investment destinations in the entire region, combining resilient economic growth, attractive valuations, and a large pool of high-quality mid-market companies. Compared to the rest of Europe, the region represents a compelling value play, with average mid-market multiples of around 5.3x EBITDA, a competitive discount relative to Northern Europe and, above all, the United States, helping to attract a steady inflow of international capital. Against a backdrop of geopolitical uncertainty, intra-regional M&A activity remains robust, with the TMT sector leading deal activity during the first half of the year. Looking ahead, the food, healthcare and energy transition sectors are expected to offer significant growth opportunities, driven by efforts to strengthen supply chains and reposition portfolios through investments in digitalisation and artificial intelligence.
Sylvain Rousmant Financial Advisory Leader

Southern Europe's leading M&A markets

While Southern Europe shares common strengths, each market offers a distinct investment story. Across the region, strong domestic businesses, increasing cross-border activity and a growing presence of private equity continue to support dealmaking.

Italy was the standout market in the first half of 2026, recording 754 transactions with a total value of €87.1 billion, the highest level seen in the country over the past two decades. Landmark deals across the banking, TMT and pharmaceutical sectors reinforced its position as the leading M&A market in Southern Europe.

One of Europe’s most attractive destinations for inbound M&A investment, Spain recorded 600 announced transactions with a total value approaching €29 billion. The country continues to strengthen its position as a key hub for AI- and technology-driven investment opportunities.

Switzerland was the region’s third-largest market, with 221 announced transactions worth a combined €16 billion. It remains a strategic destination for international investors seeking exposure to technology, healthcare and advanced industrial assets. Despite lower deal volumes, Switzerland accounted for three of the ten largest transactions in Southern Europe during H1 2026.

While deal volumes remained comparatively lower, M&A activity in Türkiye was characterised by significantly larger transaction sizes. Total deal value increased by 74% compared with 2025, reflecting continued investor interest in strategic sectors such as industrials, energy and infrastructure.

Despite a slowdown in activity during H1 2026, Portugal continues to offer attractive investment opportunities. The country maintains strong prospects across technology, business services, hospitality and the mid-market segment, supported by a dynamic entrepreneurial ecosystem and growing appeal among international investors.

Greece continues to stand out as one of Southern Europe’s most international markets. Although aggregate deal value declined compared with the previous year, M&A volumes remain at their highest levels in two decades, underlining the resilience, dynamism and ongoing evolution of the market.

Sector trends shaping the future of dealmaking

M&A activity across Southern Europe is increasingly concentrated in sectors benefiting from long-term structural trends such as digitalisation, healthcare innovation, industrial transformation and changing consumer preferences. While overall deal volumes have softened, transaction values have risen sharply, reflecting increased competition for high-quality assets.

Technology, media and telecommunications (TMT)

Technology continues to be one of the most attractive investment themes in the region. Total deal value almost doubled in H1 2026 to €28.4bn, making TMT the second-largest sector by value. AI-enabled businesses, digital infrastructure, software platforms and data-driven technologies are attracting growing investor attention, particularly in Switzerland, Spain and Italy. The sector's largest transaction was Poste Italiane's €21.4bn offer for Telecom Italia (TIM), one of the defining deals of the year.

Industrials and chemicals

Industrials and chemicals remained the most active sector by volume, generating 330 transactions during H1 2026. The sector's value more than doubled year-on-year to €16.4bn, supported by major cross-border acquisitions and ongoing consolidation activity. Southern Europe continues to benefit from a strong manufacturing base, established supply chains and increasing demand for infrastructure, environmental services and industrial technology assets.

Pharma, medical and biotech

Pharmaceuticals, medical and biotech emerged as one of the strongest sectors in terms of transaction value, reaching €19.4bn in H1 2026. Investor interest continues to be fuelled by healthcare innovation, specialised life sciences assets and growing demand for biotechnology capabilities. Large transactions involving Recordati, Lonza and DSM-Firmenich illustrate the region's attractiveness to international investors and private equity firms alike.

Financial services

Financial services generated the highest aggregate deal value among all sectors, reaching €43.5bn. The sector is being reshaped by a wave of consolidation, particularly in banking, as institutions seek greater scale, efficiency and resilience in response to regulatory and operational pressures. Italy was the epicentre of this trend, with several landmark transactions involving Monte dei Paschi di Siena and other leading financial institutions.

Consumer

Consumer M&A remains resilient and is expected to be one of the most active sectors over the coming quarters. Food production, premium brands, hospitality and consumer services continue to attract strategic and financial buyers. Interestingly, the bakery segment emerged as one of the most active subsectors in H1 2026, reflecting changing consumer demand and strong investor appetite for scalable, international consumer brands. Looking ahead, Mergermarket data indicates that consumer assets represent the single largest pool of potential future transactions in Southern Europe.

Sector consolidation still has room to run, PE dry powder remains abundant, and corporates are using M&A to reposition portfolios around AI-readiness and operational transformation. Dealmakers are cautiously confident rather than euphoric – a healthier foundation for sustained activity than the exuberance we saw in previous cycles.
Sylvain Rousmant Financial Advisory Leader

Private equity in Southern Europe

Announced in H1 2026

Total private equity deal value

Involved PE investors

Southern Europe recorded 338 PE deals (comprising buyouts as well as exits) in H1 2026, down 15% compared to H1 2025.

In value terms, PE generated €48bn worth of deal activity in H1. That represents a year-on-year increase of 23%, underlining the impact of a handful of large PE deals. Indeed, the top-10 PE deals of H1 2026 represent more than two-thirds of aggregate PE value, with UK and North American bidders accounting for all but one of the 10 largest transactions.

Competitive valuations are one of the big attractions for inbound acquirers, with Southern Europe typically offering lower entry multiples relative to the US and Northern Europe.

Several structural factors add to the attraction of Southern Europe. These include fragmented sectors that are ripe for buy-and-build, plus a continuing wave of family-owned business successions. To round it off, the region offers an abundance of targets that are a natural draw for global capital – including energy transition, infrastructure, hospitality and tourism-linked assets.

What’s really drawing UK and US sponsors south is the combination of under-penetration and untapped potential. Many Southern European markets – Italy and Spain especially – still have relatively low PE penetration compared to their economic size, meaning sponsors can genuinely be the first institutional capital into a business rather than competing in an auction.
Maurizio Galati Financial Advisory Director

Italian M&A soars to record-breaking heights

Italy stands out as Southern Europe’s largest M&A market in H1 2026, generating 754 deals – up 6.5% compared to the same period last year. These were worth a combined €87.1bn, an increase of 116% compared to H1 2025. These are the highest H1 volume and value figures on records stretching back two decades, according to Mergermarket.

€87,1 bn

Achieved by Italy in the M&A market

754 deal

M&A and PE transactions completed by Italy

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Aggregate value was bolstered by Intesa Sanpaolo’s bid for MPS. With an estimated deal value exceeding €30bn, that transaction accounts for more than a third of total Italian deal value in H1 and over 20% of all Southern European M&A activity.

Italy generated two further top-10 transactions in H1 in Southern Europe, one of which relates to Intesa Sanpaolo’s bid for MPS. In addition to the larger Intesa deal, insurer Unipol has bid €3bn to acquire 635 MPS bank branches, for which it is preparing a €2.5bn capital increase to finance the transaction. Following the deal, Unipol intends to propose to BPER Banca – of which Unipol is the main shareholder – a merger with the Siena branches, from which a post-merger group would be created under the name Banca Monte dei Paschi. Outside financial services, Italy’s next largest deal sprang from the consumer sector, with buyout firm CVC moving to acquire Italian speciality ingredients producer IRCA for €3bn.

The range of industries reflected in Italy’s largest deals is indicative of a healthy breadth and depth of M&A activity. Seven different sectors are represented among Italy’s top-10 deals, ranging from life sciences and energy to financial services and real estate.

Italy’s M&A market has genuinely earned its leading position – this isn’t a one-off spike. Domestic consolidation has been the backbone, particularly in banking and TMT. Confidence among Italian dealmakers has strengthened as financing conditions have eased and valuation gaps between buyers and sellers have started to narrow.
Maurizio Galati Financial Advisory Director