Global defence mergers and acquisitions reached a record high in the first half of 2026, with new analysis from international law firm White and Case revealing a 56% surge in deal activity as governments accelerate rearmament and investors race to secure positions in the technologies reshaping modern warfare.
According to the analysis, 42 transactions were completed globally in H1 2026, up from 27 in the same period last year. While deal volumes hit record levels, aggregate values remained broadly stable at £2.7 billion, compared with £2.8 billion in H1 2025, reflecting a market characterised by high transaction frequency rather than a small number of very large deals.
The Technology Shift Driving Dealmaking
The data points to a fundamental reorientation of defence investment. Capital is flowing not into traditional military hardware but into AI, autonomous systems, drones, digital targeting, cyber and electromagnetic capabilities, space technologies, and maritime systems. These are the capabilities that governments and military planners increasingly believe will define future advantage, and investors are moving accordingly.
Global military expenditure reached an estimated $2.6 trillion in 2025 according to the International Institute for Strategic Studies, with the trajectory set to steepen further as NATO allies push toward higher spending commitments and governments across Europe, Asia, and North America accelerate defence modernisation programmes.
This week’s news that German AI defence company Helsing raised $1.8 billion at an $18 billion valuation is the latest and most striking example of where private capital is concentrating. Other notable H1 transactions include AE Industrial Partners acquiring a controlling interest in the Space Propulsion and Power Systems business of L3Harris Technologies for $845 million, Impulse Space raising $500 million to build a fleet of ultra-mobile spacecraft, and defence robotics company Allen Control Systems raising a $200 million Series B round at a $2.2 billion valuation.
Daniel Turgel, Co-head of White and Case’s Global Technology Industry Group, said: “Defence technology is now one of the most attractive investment sectors globally, and this record level of M&A activity reflects that shift. With government defence budgets continuing to rise and private capital flowing into the sector at unprecedented levels, we expect investment and dealmaking activity to remain exceptionally strong well beyond 2026.”
What This Means for UK Defence Industry
The surge in global defence M&A has direct implications for the UK market. As well-capitalised technology companies grow rapidly through acquisition and investment, the competitive landscape for government contracts is changing. Procurement teams that have historically engaged with a relatively stable set of established primes are increasingly encountering agile, venture-backed challengers with significant resources and a software-first approach to capability development.
For UK defence businesses, the investment environment represents both a threat and an opportunity. The same appetite that is driving record M&A globally is available to British companies with credible technology propositions and routes to government contract. For SMEs and scaleups in the AI, autonomous systems, and digital defence space, the conditions for securing growth capital have rarely been more favourable.
For procurement professionals and defence buyers, the data reinforces a message that is becoming impossible to ignore: the centre of gravity in defence capability development is shifting toward technology, speed, and innovation. Procurement frameworks, supplier engagement strategies, and contracting approaches will need to keep pace.
