Middle Market M&A Survey
of Private Equity Partners for 2025-26

Optimism Returns to the Middle Market

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Introduction:

After a period of calibration, the middle market has found its footing. Our survey of Private Equity partners for the 2025-26 period reveals a clear shift in sentiment: the hesitation of the past two years is giving way to a renewed appetite for deal-making. While 2025 was a year of stabilization, the data suggests 2026 is poised for acceleration.

With interest rates normalizing and “dry powder” levels remaining near record highs, buyers are eager to deploy capital. However, the rules of engagement have changed. Creativity in structuring deals is now key to bridging valuation gaps, and new macroeconomic headwinds (2025 saw tariffs and a government shutdown added to our list of challenges) have risen to the forefront of diligence discussions.

This report outlines the state of the market, the forecasts for the year ahead, and the strategic adjustments buyers and sellers must make to capitalize on the reopening window.

What’s Covered in the 2025 Report:

• 2025 Recap

• 2026 Forecast

• Deal Structures

• Concerns

• Opportunities

• Target Criteria

• Key Actions

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Key Results Include:

Caber Hill Advisors recently surveyed partners at private equity (PE) firms investing in the middle and lower-middle market to measure the current interest, sentiment, and outlook of the M&A market among some of its most active buyers.

As a firm that specializes in being a trusted advisor to business owners and entrepreneurs seeking an exit from a business, Caber Hill sought to quantify and aggregate the insights and opinions we regularly hear from significant contacts across our network of buyers.

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THE STORY OF 2025 WAS ONE OF RESILIANCE

Following an uncertain 2024, the market steadied. A combined 40% of respondents viewed overall market strength as “better” than the prior year, while a third (34%) felt it held steady.

2026 FORECAST: THE BULL CASE RETURNS

With valuations holding steady, deal structure has become the primary lever for getting transactions across the finish line. The days of “cash at close” dominance are being tempered.

DEAL STRUCTURES: BRIDGING THE GAP

With valuations holding steady, deal structure has become the primary lever for getting transactions across the finish line. The days of “cash at close” dominance are being tempered by risk-sharing mechanisms

CONCERNS: THE TARIFF FACTOR

An even 90% of partners cited tariffs as having a negative impact on deal flow (34% “very negative,” 56% “slightly negative”) This concern trickles down to investors’ portfolio companies.

Explore the insights from the 2024-25 M&A Market Survey

download the 2024-25 report now