Luxembourg – Getting stronger

Luxembourg M&A activity has remained broadly stable year-on-year, with fewer transactions in 2025 than in 2024 but an overall aggregate deal value that is roughly unchanged.

One notable transaction in the financial sector was the acquisition of Luxembourg-headquartered, LSE-listed BBGI Infrastructure by British Columbia Investment Management Corporation, one of Canada’s largest institutional investors, for €1.3 billion.

Dynamic environment yet cautious approach

M&A advisers operated in a dynamic yet unpredictable market, with numerous buyers and sellers engaging in discussions – some terminated negotiations after the due diligence phase while others remained in extended talks. 

A limited number of transactions reached completion, insufficient to signal a return to the highly competitive, private equity-driven auction processes of previous years. 

Nevertheless, stronger activity is anticipated in 2026, driven by favourable tailwinds, particularly coming from the US.

Private equity firms remained active with strong capital deployments 

Many PE firms focused primarily on supporting existing portfolio companies amid market volatility, while also recycling capital through creative M&A strategies (such as secondaries and portfolio deals) and managing lower valuation expectations in sales. 

In the mid- to lower-middle market, buyers were often sceptical that small companies could achieve profitable growth in the current challenging economic environment. 

As a result, they invested considerable time in thoroughly evaluating target businesses, aiming to minimise risk through comprehensive due diligence and careful price negotiations.

Business models reinvention could spark M&A opportunities

It is a clear trend that the majority of corporates are under pressure to reinvent their business models. 

They need to strengthen their supply chain resilience and accelerate their transition in both the digital and the green fields. 

These changes are expected to drive an increased demand for consolidation and targeted bolt-on acquisitions.

Global tensions and regulatory scrutiny: Local challenges for dealmaking in Luxembourg

Geopolitical tensions, sanctions regimes and stringent investment-screening frameworks are adding significant complexity to global dealmaking with direct implications for Luxembourg’s M&A activity. 

These factors can not only lead to longer transaction timelines for cross-border deals involving Luxembourg-based targets but also to increased regulatory scrutiny and higher compliance costs. 

To improve deal certainty, buyers must, with the help of their advisers, navigate evolving regulatory landscapes, anticipate political risks and implement robust due diligence processes to mitigate potential disruptions.

New reform aiming to ease company formation and reinforce Luxembourg’s position as a leading business hub

On 16 December 2025, the Luxembourg government introduced a draft bill enabling founders of private limited liability companies to defer payment of the minimum share capital for up to twelve months after incorporation before the public notary.

This reform aims to modernise Luxembourg company law and strengthen the country’s position as a leading hub for business and investment funds. It is expected to streamline incorporation processes, reduce administrative burdens for dealmakers, and enhance Luxembourg’s attractiveness for investments and cross-border M&A transactions.