European Investment Banking Fees to Rebound in 2026 Lifted by PE Exits & IPO Revival

The Wall Street Journal article—corroborated by follow-up reporting from Financial News London and investment bank commentaries—makes a strong case that European dealmaking fees in 2026 are poised for a rebound. The primary catalysts are twofold: first, private equity firms, which have been hesitant in 2024-25 due to valuation gaps and exit challenges, are expected to increase exits, particularly via continuation funds and IPOs. [1][2] Second, IPOs in Europe, though still subdued, show signs of life; notable recent floats and rising dialogues with sponsors suggest that the market may move into a higher gear. [2][3]

Data from 2025 underpins both the concern and the potential. Europe’s total M&A volume came in at around US$894.5 billion—a 22% increase year-over-year—but fee-growth in investment banking was only about 2%, far below the U.S. (14%) where deal sizes have skewed much larger. [1] IPO proceeds in Europe remain weak—only US$19.4 billion in 2025 overall—and many of the successful recent IPOs are relatively small and localized. [1][2][4]

However, certain macro and structural factors favor a sharper recovery in fee pools for 2026. Interest rates in Europe are showing early signs of stabilization, improving the equity issuance backdrop. [2] Regulatory reforms—such as reforms to listing requirements in the UK/EU—are also easing barriers for companies to go public. Sectors aligned with global megatrends—including infrastructure (sustainability, electrification), healthcare, fintech, and industrials—are likely to account for a disproportionate share of IPO and M&A activity. [2][1]

That said, bankers remain cautious. Key risks include macroeconomic headwinds—particularly high inflation, geopolitical instability, and interest rate volatility—which could derail the deal pipeline. Valuation mismatches between buyers and sellers persist especially for large-scale transactions. Market liquidity and investor risk appetites are also sensitive to US policy, global economic growth, and changes in capital cost. All of which implies that while improving, European fee recovery may lag the U.S. by 3-6 months or more. [1][2]

Strategically, for investment banks, the outlook suggests the following: invest in strength in advisory and ECM teams to capture IPO exits; deepen sector specialization especially in infrastructure and tech adjacent industries; manage cost of capital and underwriting risk; and monitor regional policy shifts and capital flows, especially from U.S. and institutional investors seeking yield outside their home markets.