Q2 2026 Takeaways:
Momentum continues to build
- Small-cap equities rallied through H1 2026, with the S&P SmallCap 600 returning ~24%, while the Persient Middle Market M&A Index also moved higher.
- Middle market M&A volume increased ~8% and transaction value increased ~22% versus H1 2025, signaling greater capital deployment behind larger deals.
- Industrials led deal count growth, supported by reshoring, infrastructure investment, automation and power/data center demand, while technology benefited from continued investment in AI and cybersecurity.
Rates, tariffs and uncertainty remain
- The Federal Reserve held rates at 3.50%–3.75% through Q2 as inflation remained above its 2% target.
- U.S. real GDP grew at a 1.5% annualized rate in Q2, down from 2.1% in Q1, highlighting a resilient but moderating economy.
- Tariffs and geopolitical uncertainty continue to pressure business planning and input costs, reinforcing a selective M&A environment.
Looking ahead to 2H 2026
- Valuations remain supportive for quality assets, with trailing middle market EBITDA multiples reaching 10.4x, up from 10.1x in 2025.
- Private equity remains active but selective, with 77% of PE dealmakers expecting M&A volume to increase or remain stable in 2H 2026.
- Strategic buyers continue to pursue scale, technology and market expansion, supporting continued middle market M&A activity in 2H 2026.
