The New Paradigm of M&A in Portugal: Cautious Investors and Strategic Deals

By Virgínia Duarte

Corporate Finance Coordinator

Yunit Consulting

The decline in mergers and acquisitions (M&A) activity in Portugal during the second quarter of 2026 confirms a significant shift in market behaviour. Investors, companies, and economic groups are today more cautious, highly selective, and less willing to proceed with transactions that lack a clear strategic rationale.

The M&A Landscape in Q2 2026

Data reveals that in the second quarter of 2026, M&A operations in Portugal generated €1.29 billion, reflecting a slowdown compared to the 185 transactions in the first quarter and the 158 in the same period of 2025. The number of transactions announced and completed during the quarter stood at 122 operations. In an international context still constrained by the macroeconomic environment, geopolitical tensions, and a heightened focus on risk mitigation, these figures demonstrate that the market now places a greater emphasis on asset quality, robust cash flows, and the coherence of investment theses.

Sectoral and Geographical Dynamics

The sectoral distribution reinforces this assessment. Real estate remains the primary driver of market volume in 2026, albeit experiencing a slight decline. Nevertheless, the most compelling data emerges from Telecommunications, the Financial sector, and Infrastructure, which lead in invested capital, accompanied by a strong surge of interest focused on Renewable Energy, Artificial Intelligence, Defence, and Healthcare (Medtech). In a consolidating market, this dynamic shows that certain sectors continue to benefit from consistent demand, particularly when associated with efficiency, specialisation, and the ability to address the structural needs of companies.

The geography of investment also reveals a notable shift. Market momentum has been largely driven by cross-border activity, with the year-to-date recording 52 acquisitions of Portuguese companies abroad (totalling approximately €1.69 billion) and 59 purchases by foreign investors in Portugal (amounting to roughly €392 million).

Private Equity and Key Transactions

Concurrently, Private Equity activity in Portugal revealed a landscape of contrasts: while the year-to-date saw a decline compared to 2025 with 31 transactions (-36.73%) and €340 million (-62.81%), the second quarter alone demonstrated a strong recovery of capital, totalling 13 deals that amounted to €320 million (a 1,500% growth in value).

In this new equilibrium, the most active Private Equity funds operating in Portugal have been Draycott (with 4 operations), followed by C2 Capital Partners (with 2 operations) and Vallis Capital Partners (with 2 operations). These players have gained traction in capital allocation and in strengthening the national corporate fabric, illustrating how various actors sustain investment in value-added assets within the Portuguese market.

Outlook for H2: Realism and Optimism

The second half of 2026 should, therefore, be viewed with realism, but also with optimism. An acceleration is expected for the remainder of the year, driven by a high volume of accumulated deals in the pipeline and improved financing and credit conditions. The cycle will likely remain characterised by tactical execution, negotiating discipline, and risk mitigation. The transactions most likely to proceed will be those offering complementarity, economic rationale, and the ability to strengthen strategic positions.

The Portuguese M&A market is undergoing a phase of greater refinement. The sheer volume of transactions is no longer the sole primary indicator of vitality; the true sign of maturity will lie in the ability to execute deals with strategic purpose, resilient assets, and sustained value. M&A in Portugal may be slowing down, but it is becoming more discerning.