After years of subdued deal activity, middle-market M&A is showing clear signs of acceleration in 2026. Financing conditions have stabilized, valuation gaps between buyers and sellers are narrowing, and private equity firms hold near-record levels of dry powder ready for deployment. Industry surveys from Cherry Bekaert, BDO, and Nixon Peabody all point to the same conclusion: pent-up demand is converting into real deal flow, particularly in the lower-middle and middle-market segments where Herondale operates.
Several sectors are commanding premium valuations and attracting intense buyer interest. Technology — particularly AI infrastructure, cybersecurity, and software — remains a centerpiece of deal activity as companies across industries pursue acquisitions to accelerate digital transformation. Healthcare services continue to generate strong activity, driven by demographic trends, cost pressures, and the shift toward integrated care models. B2B services also draw significant attention from both strategic buyers and private equity firms, thanks to recurring revenue models and scalable platforms that lend themselves to buy-and-build strategies.
Creative deal structures like earnouts, seller notes, and rollover equity remain prevalent as tools to bridge remaining valuation gaps, though these require careful structuring to avoid disputes. Demographic shifts are also playing a role — aging business owners who have weathered volatility since 2020 are increasingly motivated to transact rather than wait for perfect conditions. For well-capitalized, operationally focused firms, 2026 represents a meaningful window to acquire quality businesses at reasonable entry points before the broader market fully reprices.
