The push for corporate scale has led to a remarkable flurry of European megadeals so far in 2026, the latest being the combination of Finnish lift-maker Kone and TK Elevator (TKE), announced last week.

TKE was a red-hot IPO candidate, but as talks between Kone and TKE’s sponsor owners Advent and Cinven continued, the attraction of the strategic merger held more appeal for the sellers.

There has been over USD 539bn of announced M&A transactions in Europe year-to-date (YTD, to 5 May), across 5,511 deals – up from just over USD 302bn of deals in the same period last year, although this was across 6,808 transactions, according to Mergermarket data. Big deals are moving the needle.

TKE is the second largest transaction of the year so far, at an enterprise value of EUR 29.4bn, behind only Unilever’s USD 42.7bn divestment of its food business to US player McCormick.

With strategic scale more important than ever, and underlying share prices supportive given a recent rally in stocks despite ongoing hostilities in the Middle East, strategic buyers can seriously compete with the IPO market for high quality businesses like TKE.

Accelerated market strength expands art of the possible

The attraction of the tie-up was enough to convince Cinven and Advent to take EUR 15.2bn in Kone shares, on which they will have a 180-day lock-up upon the share delivery. They are also set to receive EUR 5bn in cash, far more proceeds than they would likely have banked in a mostly primary IPO.

Cinven and Advent will then be able to monetise Kone holdings in block trades, à la Blackstone when it acquired a large chunk of LSE during the latter’s purchase of Refinitiv, one of the most valuable and successful disposals in recent European capital markets history.

European accelerated markets have become unbelievably deep and efficient in the past few years, which should encourage more vendors to consider paper consideration for their portfolio assets, which they can then sell-down through block trades later down the line.

Equity finance and share considerations are allowing acquirors to reach for scale without loading up balance sheets at a time when the direction of European interest rates remains highly uncertain.

For acquirors, strong accelerated markets have also opened the possibility of mega capital raises to fund cash considerations in M&A deals, such as Zurich’s CHF 3.9bn share placement to fund its buy of UK insurer Beazley and Engie’s EUR 3bn capital raise to partially finance the acquisition of UK Power Networks.

Other issuers have also issued primary accelerated bookbuilds (ABBs) to fund organic growth, such as infrastructure and power grid modernisation.

Source: Dealogic

It is somewhat ironic that the travails of Europe’s IPO market since the start of 2022 has coincided with a remarkable enlargement of the investor base seeking to take part in European ECM, but mostly through accelerated sell-downs.

In both the primary and secondary markets, this increased depth has allowed for corporate issuers and sponsor shareholders to sell-down billions of dollars of stock overnight; facilitating incredibly fast disposals of huge, listed positions, or the sort of corporate financing that pre-pandemic used to only have been deemed possible through a rights issue exposed to lengthy market risk.

The push for scale has led to USD 15.45bn of primary European paper printed in the accelerated market YTD as of 5 May, surpassed only by 2021 when businesses were scrambling for cash in the wake of Covid-19 lockdowns, according to Dealogic data.

That year was about short-term survival – this wave is about seeking strategic dominance in the long-term. In the land of geopolitical and interest rate uncertainty, the listed-large-cap is king.

“I am most excited about M&A and primary raises at the moment,” noted one ECM banker. “In the accelerated market, the backdrop is healthy when volatility is low.

“This is conducive to M&A financing through equity raises and, given discussions with our clients, I expect there to be more of that very soon.”

The banker’s only concern was that greater competition for roles on those large M&A deals would mean a huge disparity of outcomes for the sell-side in 2026, particularly given IPO market weakness. Those that land the big underwriting roles on M&A financing will be popping champagne; the rest might be stuck sipping water.

M&A feast, IPO famine

The remarkable start to the year for European M&A and primary equity financing is juxtaposed with a regional IPO market that remains beset by geopolitical turmoil and delay. The Strait of Hormuz remains shut; so is the market for most European IPO candidates.

Not only have TKE’s sponsors decided to push for a sale over an IPO, no small decision given the complexities of the antitrust issues facing the merger, but other listings also remain in limbo.

The pre-summer listings of Digi’s Spanish unit and UK driving services business RAC Group, among others, have now been delayed until at least the second half of the year.

While other IPOs have not been officially delayed, there is a noticeable lack of momentum among several new listing candidates.

Geopolitics has returned as a timetable killer in 2026, as ECM Pulse noted last week. Woes in the European IPO market are structural, which means any moment of market weakness can compound into paralysis.

Simply put, the recent track record of newly listed companies in Europe has been poor, with many falling short of the aggressive earnings estimates outlined in IPO prospectuses.

This tends to decimate the valuation of newly listed companies and has led to a now entrenched view among the buyer base that they must have far more cushion to listed peers to justify the risk, given the relative lack of liquidity to listed peers plus the greater size of position that is naturally part of any IPO investment.

Once a business is on the stock market and has regularly hit numbers, any IPO discount they had to give up falls away into history. Just ask EQT or Apollo following their respective multi-billion series of sell-downs in Swiss skincare business Galderma and Italian gaming company Lottomatica.

But they had to take a big hit on value to do the listing. The key to restarting Europe’s IPO market this year will be whether other issuers are willing to do the same.

by Samuel Kerr