Breaking the Dam: ACG’s 2025 M&A Recap and 2026 Outlook
GF Data numbers showed the challenges midmarket M&A encountered in 2025 and trends for the year ahead during a recent members-only webinar
ACG’s 2025 M&A Recap and 2026 Outlook was delivered via members-only webinar on Jan. 28. Attendees heard from Brent Baxter, CEO of ACG, and Bob Dunn, chief product officer of ACG (previously managing director of GF Data, an ACG company), on last year’s numbers and what 2026 holds for middle-market M&A.
Positive Sentiment and Steady Numbers
Middle-market dealmakers are approaching this year’s M&A market with steady but realistic optimism.
“[Roughly] 70% of dealmakers are predicting an increase, either slight or significant, [in deal activity],” said Baxter, referencing numbers from ACG’s Middle-Market Outlook Survey, published in January. “This is meaningful because these are people from the trenches. These are the people that are out there doing deals.”
Event Recap
WHAT: 2025 M&A Recap and 2026 Outlook Members-Only Webinar
WHEN: Jan. 28
THE TAKEAWAY: While 2025 M&A posted lackluster numbers, dealmakers remain optimistic that the dam will break in 2026
Dunn shared numbers from GF Data’s reports on private equity-backed M&A transactions in the $1 million to $500 million deal size range. Valuations on the deals GF Data tracked in 2025 remained on par with the two previous years—averaging 7.2x total enterprise value (TEV)/EBITDA—down slightly from the 7.6x seen in 2021 and 2022.
2025: A Year of Challenges
Despite stable valuations, bullish predictions for 2025 never quite materialized, with dealmaking dragged down by tariff uncertainties and other headwinds. Dunn noted a serious decline in deal volume, with GF Data’s numbers revealing a 23.5% decline between 2024 and full year 2025.
“We’re at the same level [as] 2023 in terms of deal volume, so if you think back to what the market was looking like there, at least volume is reflecting a similar market and similar challenges,” he said.
Even above-average financial performers, which GF Data defines as companies with greater than 10% trailing 12-month (TTM) EBITDA margins and 10% or greater TTM revenue growth, did not see their usual premium prices in 2025. The numbers show a continued narrowing of the performance gap between above-average performers and other companies, starting in 2024 and continuing in 2025. In 2025, that premium price difference was down to just 3%.
Dunn said this is due in part to fewer companies making it into the above-average category. “They have not had the revenue growth above 10% for the prevailing 12-month period,” he explained.
Some sectors fared better than others, however. When GF Data drilled down into specific business categories, they found that manufacturing suffered in 2025, and business services prospered, with tariffs likely the main cause for both turns of fortune. “I would say companies that don’t have tariff exposure, they can do very well in this market,” said Dunn.
The Promise of 2026
Turning his gaze to the year ahead, Baxter shared more numbers from ACG’s Outlook Survey, noting that respondents expected the pressure to return capital to investors and the forces of timing and market conditions to act as the greatest drivers of deal activity in early 2026.
“That dam does need to break,” he said. “At some point, investors are going to just demand their money back, even if it’s at somewhat depressed return levels.”
AI popped up as another hot topic for the year ahead, with real efficiency gains and innovations beginning to materialize for many sectors, including for the middle-market dealmaking community itself. Dunn noted that while he does expect some kind of right-sizing of the AI hype, similar to the dot com crash, he still expects the positive impact of AI implementation to be massive.
Answering an audience question about industry trends for 2026, Dunn closed with some thoughts on how valuations in specific sectors would fare, noting that he expects manufacturing to still face challenges but to see improvement in deal volume by midyear while business services will stay hot and technology has seen positive movement recently.
Hilary Collins is ACG’s Associate Editor.
Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit acg.org.
