European Investment Banking Fees to Rise in 2026 on Strong M&A, PE & IPO Momentum

According to a recent Wall Street Journal–summarized report, leading European City investment bankers forecast that 2026 will mark a meaningful uptick in fee-based revenue driven by private equity (PE) activity and a slow but visible recovery in IPO pipelines. The European fee pool rose just ≈2% year-on-year in 2025, contrasted with around 14% growth in the U.S.—a gap stemming largely from sluggish equity capital markets and IPO issuance. [1]

Complementary data supports this narrative. Dealogic figures show that European M&A deal value in 2025 asked rose significantly (≈22% YoY), even as deal volume remained modest, indicating that the strength in fees will be concentrated in larger (“megadeal” or “mid-market high-value”) transactions. [1] European investment banking fees in H1 2025 fell ≈11% YoY, particularly from ECM and IPO underwriting where proceeds and commissions dropped sharply; however, the rebound in H2, coupled with regulatory reforms, is expected to partially restore equity-related revenues. [2], [3]

Going into 2026, three principal levers are poised to drive fee growth: first, private equity sponsors unlocking exits—especially via IPOs or continuation vehicles—and increasing M&A advisory for PE-led deals. [1] Second, regulatory developments—such as the EU common prospectus and the Listing Act—are lowering issuance friction, potentially widening IPO windows. [4] Third, macro drivers: lower financing costs, more stable inflation, and stronger corporate earnings are expected to improve valuations and underwriting confidence. [2], [3]

Nevertheless, dealmakers remain cautious. Persistent valuation mismatches between buyers and sellers are delaying or scaling down deals, particularly in private equity and high-growth sectors. Financing conditions, while improving, remain tighter than pre-pandemic norms, and geopolitical risk—trade wars, regulatory fragmentation across the EU, and political instability—could still derail momentum. [3], [4]

Strategically, banks in Europe must prepare for a bifurcated feast: those with PE advisory strength, ECM underwriting expertise, and access to large cross-border transactions (especially infrastructure and TMT) stand to win; those heavily reliant on small IPOs, domestic equity capital markets, or vulnerable sectors may lag unless they pivot. Open questions focus on timing of sector-specific recoveries, depth of IPO pipeline, and the pace at which regulatory reforms translate into transaction flow.