Both M&A deal value and volume declined in Greater China in the first seven months of 2026 compared to the prior-year period, following the Mainland China–led rebound in 2025. (See Exhibit 1.) But the regional picture is becoming more constructive: Hong Kong’s strong capital markets and expanding exit pipeline are improving transaction confidence, and Taiwan is attracting strategic attention around AI hardware, advanced manufacturing, and supply-chain resilience. These factors may not signal a uniform recovery, but they speak to a broader set of transaction catalysts across the region.
The next cycle is unlikely to recreate the liquidity-led breadth of 2021 and 2022. Instead, activity is likely to concentrate in deals where ownership can unlock an advantage: control of underleveraged assets, global commercialization of Greater China–origin innovation, consolidation of AI-enabling supply chains, or overseas capabilities that shorten time to market or reduce geopolitical exposure. Hong Kong can increasingly serve as a financing and exit bridge; Taiwan can act as a focal point for strategic consolidation; and Mainland China can function as a source of assets, technology, and scaled operating capabilities.
For CEOs, boards, and financial sponsors, the implication is bullish but also more demanding. Greater China is transitioning from a broad, market-wide investment opportunity to a collection of investable micro-markets. Instead of waiting for deal volume to recover, acquirers should identify targets where a change in ownership, capital structure, or geographic platform can capture value that the current owner cannot. In this region, four emerging themes are most noteworthy.
From Beta to Alpha: Control Becomes the Model for Value Creation
Financial sponsors in Greater China are shifting their exposure from passive growth (that is, relying on market growth alone) to ownership structures that provide the control they need to achieve alpha. Public data sets use varying parameters, but all point in the same direction: The market has become more control-oriented. Buyouts accounted for 54% of private equity deal value in 2025, a significant increase in comparison with 2021 and 2022. (See Exhibit 2.) This trend indicates that even though growth equity remains an important strategy, marginal dollars are moving toward transactions where the sponsor can influence performance.
Control, therefore, has become an economic tool, not simply a governance preference. Buyouts, carve-outs, take-privates, and majority joint ventures allow investors to underwrite operational improvements rather than depending on multiple expansion or category growth. For corporates, the same logic supports ownership resets, retaining brand, intellectual property, or minority economics while transferring execution to an owner that has stronger local capabilities. The emerging model is “alpha with rights”—a clear value creation thesis paired with the authority to deliver it.
Example | Mainland Chinese PE Uses a Majority Joint Venture to Localize a Global Consumer Brand
Product to IP: Mainland China Innovation Becomes a Global Transaction Currency
Mainland China is becoming valuable not only for the scale of its market and manufacturing base, but for the quality and exportability of its intellectual property. Its progress is visible across sectors. In electric vehicles and batteries, manufacturers worldwide are using Mainland China–originated technology, engineering, and product architectures in commercial applications. Mainland Chinese exports of electric vehicles, lithium-ion batteries, and photovoltaic products reached approximately $180 billion in 2025, about 3.5 times the 2020 level. The disclosed value of global licensing deals for Mainland China–origin biopharma assets has risen tenfold since 2020; in 2025, five of the ten largest global R&D licensing partnerships involved Mainland China–based companies.
This is the strategic equivalent of a “Kimi moment”— a visible proof point that changes global assumptions about the quality and pace of innovation in Mainland China. The M&A implication goes beyond biotech. Assets with defensible intellectual property, credible validation, and a route to global commercialization platforms can command strategic value even if their domestic revenue base is currently limited. The transaction opportunity spans licensing, NewCo structures, asset-rights deals, minority investments, and acquisitions designed to combine drug candidates discovered in Mainland China with global regulatory, clinical, branding, and distribution capabilities.
AI Stack Reconfiguration: Consolidate Bottlenecks, Build Parallel Platforms
AI investment in Greater China is creating two deal agendas. The first relates to interdependence. Even as US and Mainland China technology ecosystems diverge, critical inputs, equipment, and subcomponents remain embedded in cross-border supply chains. Taiwan’s full-year 2025 exports reached a record $640.8 billion, up 34.9%, with exports of electronic components rising 26%, according to Taiwan’s Overseas Community Affairs Council, and exports of information and communications products almost doubled as AI demand accelerated. That scale creates an M&A agenda around capacity, supplier resilience, and vertical capability consolidation. The investable layer is often situated below the headline chip level, in areas such as component cleaning and equipment services; connectors and optical modules; and thermal management, power systems, and automation. These assets can be strategically important to both domestic and global customers, making them candidates for consolidation even as final-system architectures separate.
The second deal agenda involves investment in the rest of the Mainland China AI stack, as Mainland China and global architectures separate. Data centers, cloud infrastructure, network connectivity, data governance, power and cooling systems, and operating software increasingly need different ownership, financing, technology, and compliance models inside and outside Mainland China. This divergence creates opportunities to build or acquire parallel platforms: one optimized for domestic Mainland Chinese customers, regulations, and capital pools; and the other designed for Mainland Chinese companies that are expanding overseas and for global customers that require non-US infrastructure. The value lies in separating the tech stack layers that must diverge while preserving common operating capabilities, customer relationships, and procurement advantages wherever they remain transferable.
Example | AI Infrastructure Increasingly Requires Parallel Ownership Platforms
Strategic Outbound: Greater China Buyers Are Acquiring with Clearer Mandates
Outbound M&A in Greater China is recovering, but the new wave is more targeted than trophy-driven. Outbound buyers are using M&A to close specific strategic gaps in their industrial capability, technology access, customer proximity, supply-chain localization, and geopolitical risk management. The recovery is more visible in deal value than in deal volume. Average deal values of Greater China–announced overseas M&A more than doubled in the first seven months of 2026 compared with the first seven months of 2025, but deal volume decreased 35%, pointing to fewer, larger, and more mandate-led transactions. (See Exhibit 3.)
This marks a break from some aspects of the previous outbound cycle. The new logic is less about acquiring offshore scale and more about building local manufacturing, market access, and operating resilience in markets where trade barriers, tariffs, and customer proximity are increasingly important. The strategic lesson is not simply to pursue separation. Rather, it is to match assets, customers, governance, and capital pools to the regulatory and commercial requirements of each market.
Example | Mainland Chinese Automaker Acquires Overseas Brownfield Manufacturing Assets
Act Now, With a Different Mandate for Each Owner
The opportunities in Greater China are becoming clearer, but the winning agenda differs by owner type. Financial sponsors, local corporates, and multinationals should not wait for a broad-based recovery. They should use the current selective market to reposition their portfolios before competition and valuations normalize.
Financial sponsors should prioritize establishing control or governance rights that are commensurate with the value creation plan, build operating capabilities around carve-outs and localization, and underwrite exits at signing rather than relying on market gains alone. Local corporates should use M&A to acquire global channels, brands, intellectual property, and production footprints that will accelerate internationalization, while also separating domestic and overseas infrastructures in contexts where regulation and customers require different stacks. Multinationals in Greater China should conduct a best-owner review of each business, deciding where they should double down, where a local partner or majority owner can unlock growth, and what Greater China–origin intellectual property they can commercialize through the global platform.
Across all three groups, the call to action is the same: translate each theme into a named asset list, an ownership thesis, and a 100-day value-creation agenda. The market will reward owners that can move from thematic conviction to executable transactions, with the rights, capabilities, financing, and cross-border architecture necessary to deliver the thesis after signing.
