Middle-Market M&A Regains Its Footing as Growth Takes Priority
Deal activity is stabilizing, valuations are holding, and sponsors are looking beyond add-ons to create value
After several uneven years, middle-market M&A appears to be settling into a steadier rhythm, while the focus for many owners and prospective buyers has shifted to organic growth.
ACG’s 2026 M&A Mid-Year Recap & Outlook webinar explored these trends on Sept. 22, featuring perspectives from Bob Dunn, ACG’s chief product officer and former managing director of GF Data, and Scott Linch, leader of Forvis Mazars’ private equity sector practice and the firm’s investment banking practice.
GF Data, which tracks private equity-backed middle-market transactions, recorded 170 completed transactions in the first half of 2026, putting the market on pace for about 340 deals, roughly 10% more than in 2025. Quarterly volume also remained consistent, with 85 transactions in both Q1 and Q2.
Event Recap
WHAT: 2026 M&A Mid-Year Recap & Outlook Webinar
WHEN: Sept. 22, 2026
THE TAKEAWAY: Deal activity is stabilizing, valuations are holding, and sponsors are looking beyond add-ons to create value.
GF Data tracks deals valued between $1 million and $500 million; the data cited in the webinar was from its standard $10 million to $500 million cohort.
“Things are pretty steady from a transaction standpoint,” said Linch, adding that the recent increase in interest rates will likely keep M&A markets at a steady level for the time being. “But as soon as people continue to put more money to work, I think we’ll see increased activity. There’s plenty of appetite to get deals done.”
Pricing has changed little at the headline level. The first-half average was 7.1x trailing 12-month (TTM) adjusted EBITDA, within one-tenth of a turn of both 2024 and 2025. Below the surface, however, the platform premium flipped. Platforms held a 1.1x advantage in Q1, while add-ons priced 1.2x higher in Q2, likely a factor of the deal composition.
“We saw more small deals in the second quarter, whereas it was more of an even spread in the first quarter,” Dunn said. High competition for add-ons and more add-ons in the sample size helped drive up their valuations in Q2 relative to platforms, he added.
Add-ons remain a fixture of the market, although not at the level seen in early 2025. They accounted for 36% of first-half deals in 2026, up from 33% in the second half of 2025 but below the 42% recorded in the first half of 2025. “It’s still very much a buy-and-build marketplace. It’s still aggressive on the pricing of add-on acquisitions,” Dunn said.
Linch agreed that add-ons continue to be an active segment of the market, yet he has observed a shift in the growth strategies of some companies following the add-on spree of 2025. “I feel like there’s been a little less focus on the add-on game, and a focus more on how we grow the business organically,” he said. “Because inorganic growth is only going to take you so far from a valuation standpoint.”
GF Data’s figures show an erosion of revenue growth for businesses it tracks, compared to the prior two years. Economic pressures have contributed to constrained growth, prompting owners to pull back from M&A to a degree. “I think the focus on the core company—the platform itself—first, and then the add-on as the secondary layer is something people are following in the marketplace,” Dunn said.
Pricing Trends
Sector-level data and anecdotal observations reveal disparities beneath the broad-based valuation trends.
According to GF Data, business services led the market at 7.5x, buoyed by a second-quarter rebound, while manufacturing improved to 7.1x from 6.7x in 2025. Healthcare services moderated to 7.7x, though a small sample warrants caution. Distribution stood apart, falling to 6.0x, its weakest reading in the series.
Linch noted that businesses in popular sectors today can attract double-digit valuation multiples, with artificial intelligence and data center-adjacent businesses as prime examples. On the other hand, multiples in sectors at risk of AI disruption, like software, have taken a hit.
The data shared on the webinar highlighted a narrowing of the premium paid for high-quality businesses over their peers, which has averaged about 15% historically. The compression began in 2025 and continued throughout that year.
The premium paid for above-average financial performers (AAFP) was 7% in Q1 2026, but dipped to 5% for the first half. Larger, better-performing, and better-financed platforms transacted in Q1 while none traded in Q2, which contributed to the premium decline when Q2 data was incorporated into the analysis.
Dunn noted that the premium compression was likely due in part to continued add-on activity, where businesses tend not to meet GF Data’s criteria for AAFP (TTM EBITDA margin and revenue growth both above 10%, or one above 12% with the other at least 8%).
Competition for add-ons that aren’t considered AAFP businesses is driving up valuations in the non-AAFP bucket. Meanwhile, constrained revenue growth is driving down valuations for high performers. Together, those forces have compressed the quality premium to its current level. Multiples paid for top performers eased to 7.1x in the first half, while other buyouts strengthened to 6.8x.
Year-Ahead Outlook
Looking ahead to 2027, Linch and Dunn expect deal activity to increase slightly. Elevated public market valuations, extended private equity holding periods, and a potential change in administrations and federal tax policy are all factors that could drive sellers into the market.
Taxes will be on the minds of baby boomer sellers who have waited on the sidelines but now might want to bet on the current tax rate.
“A lot of people know what taxes are today, so they’re more willing to say, ‘I know where capital gains are now, so I might want to go ahead and exit now knowing what I know, versus what I don’t know,’” Linch said.
Katie Maloney is ACG’s Vice President, Communications & Content.
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.
