Investing in Southern Europe: 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.

“Inorganic growth within each economic bloc tends to intensify in periods of geopolitical tension. Advisers in the region are explicitly flagging stronger regional ties as a driver.”

Sylvain Rousmant, Financial Advisory Leader, Forvis Mazars in Italy

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: the region's M&A powerhouse

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.

· Spain: value creation and mid-market strength

Spain continues to be one of Europe's most attractive destinations for inbound M&A. With 600 announced transactions valued at nearly €29bn, the market benefits from strong economic growth, attractive valuations and a highly active mid-market segment. Spain also stands out for its growing role in AI and technology-related investments, while private equity remains a major force behind large-scale transactions.

· Switzerland: innovation-driven dealmaking

Switzerland remains a strategic hub for international investors seeking access to technology, healthcare and advanced industrial assets. Despite lower deal volumes, the country generated three of the ten largest transactions in Southern Europe during H1 2026 and continues to attract substantial inbound investment thanks to its reputation for innovation, stability and highly specialised companies.

· Turkiye: strategic assets attracting investors

M&A activity in Türkiye was characterised by fewer but significantly larger transactions. Deal value increased by 74% year-on-year, reflecting sustained investor interest in strategically important sectors, including industrials, energy and infrastructure. Domestic investors continue to dominate activity, supported by the country's strong manufacturing base and growing regional influence.

· Portugal and Greece: resilient specialist markets

Although deal activity softened in H1 2026, both Portugal and Greece continue to offer attractive opportunities. Portugal maintains strong fundamentals in technology, business services, hospitality and mid-market transactions, while Greece remains a highly international market where inbound investment and private equity-backed transactions play a crucial role in driving activity.

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.

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.

Private equity in Southern Europe

Private equity remains a central force in the Southern European dealmaking ecosystem. Although overall PE deal volume declined during H1 2026, aggregate deal value increased by 23%, driven by several high-profile transactions in pharma, industrials, infrastructure and consumer sectors.

International sponsors continue to see the region as an attractive investment destination thanks to favourable valuations, fragmentation across key industries and a steady pipeline of succession-driven opportunities. These characteristics create ideal conditions for buy-and-build strategies and long-term value creation.