Scale deals vs. scope deals – where is value created in M&A today?

Shift in the Character of Transactions in 2025 and 2026

The M&A market is undergoing continuous transformation. In 2025 and 2026, a visible shift occurred in the nature of transactions and the approach of investors, who began to focus to a significantly greater extent on scope deals (capability-driven transactions). The development of sectors such as deep tech, defence tech, AI, and the space industry has led investors to seek unique competencies, advanced technologies, and breakthrough solutions.

While consolidation transactions (scale deals) naturally remain present in the market, a portion of PE/VC investors and Family Offices are approaching scope deals with increasing attention

Scale Deals vs. Scope Deals

Changes in the character of M&A transactions are associated with a partial paradigm shift in value creation. Traditional M&A transactions focused on scale deals (consolidation transactions), whose primary goal was to increase the scale of operations, reduce fixed costs, and achieve synergy effects, among others. A classic example of this approach is the “buy-and-build” strategy—creating a platform for business growth through successive acquisitions of companies that are individually valued significantly lower than the value they gain once integrated into the legal or economic structure of the parent entity (utilizing the mechanism of valuation arbitrage post-acquisition).

Another classic model of value creation is the strategy of merging two companies of similar size but with significant synergies and complementary ranges of services or products. This allows them to compete with trade or strategic investors due to the scale and synergies achieved, which has an obvious impact on increasing the value of the merged business.

However, technological advancement is rendering traditional value creation models insufficient. Increasingly, the technological race leads to valuations of deep tech companies that factor in a hypothetical future terminal value. In essence, investors are buying future growth in terms of both revenue and technology, as well as the resulting future (potential) increase in valuations.

This means that scope deals, through the valuation growth mechanism described above, often allow for higher returns on investment than an equivalent capital investment in a scale deal.

In a scope deal, an investor acquires unique new competencies and opportunities for rapid growth and expansion (building a swift competitive advantage). These transactions enable investments in projects that generate breakthrough technologies, allowing value to be built within a very short timeframe.

Shift in the Character of Due Diligence

The aforementioned changes in the nature of M&A transactions also entail a shift in the character of due diligence. The development of AI technology means that an inherent feature of this investigation is now analyzing the extent to which AI advancements create risks (or opportunities) for the specific sector in which the Target operates (particularly if it is an entity in a sector vulnerable to structural changes driven by AI). These circumstances make the selection of experienced transaction advisors—who understand technological shifts and their impact on M&A transactions—absolutely crucial.