Global M&A activity finished 2025 up 43 percent year-over-year, reaching $4.7 trillion in total deal value, 20 percent above the ten-year average. Mega-deals anchored by AI infrastructure and sovereign wealth capital dominated the narrative. By most measures, dealmaking is back.
But the more interesting story may be unfolding one tier lower.
At SCG Global, our focus has always been the lower middle market and the current environment offers a compelling set of conditions for disciplined investors, owners, and advisors who understand that space.
The Top End Is Crowded by Design
The resurgence at the top of the market is real. According to Morrison Foerster’s 2025 M&A review, global buyout value increased 39 percent to approximately $850 billion, with 13 mega-buyouts recorded, more than double the prior year. AI transactions alone reshaped the landscape, from SoftBank’s $40 billion commitment to OpenAI to the $500 billion Stargate Project.
When the largest funds in the world are all targeting the same assets, competition intensifies and entry valuations reflect that pressure. That dynamic structurally advantages investors who operate in less contested segments of the market.
What’s Happening in the Middle Market
After several years of muted activity, the middle market is showing meaningful signs of recovery.
Platform acquisitions rebounded with a 42 percent year-over-year increase in Q4 2024 and 43 percent growth in Q1 2025, the first sustained upturn after 10 consecutive quarters of negative growth (Capstone Partners). Middle market add-on acquisitions posted their first three consecutive quarters of positive year-over-year gains since 2022. According to Deloitte’s 2026 M&A Trends Survey, more than 80 percent of PE and corporate dealmakers expect to complete a greater volume of deals in 2026 than in 2025.
Capstone Partners’ recently released 2025 Middle Market M&A Valuations Index characterizes the market as “positioned for steady re-acceleration,” supported by stabilizing valuations, healthier balance sheets, and rising investor demand for quality assets.
Notably, just 20 transactions accounted for one-third of all U.S. deal value in 2025 (Deloitte). That concentration at the top leaves a large and active universe of mid-sized transactions that remain less competed-for and more accessible to specialized investors.
Key Data Points Worth Tracking
Valuations: Average middle market M&A multiples settled at 9.8x EV/EBITDA in 2025, up from 9.4x in 2024 and 9.0x in 2023. Quality assets in Business Services, Technology, Aerospace & Defense, and Healthcare IT commanded the strongest multiples (Capstone Partners).
Leverage: Average net debt-to-EBITDA fell from 6.2x in 2024 to 3.4x in 2025, indicating more conservatively structured transactions compared to prior cycles.
Dry Powder: Private equity firms hold approximately $1.6 trillion in uncommitted capital (Capstone Partners). As financing conditions ease and LP pressure mounts, deployment into the middle market is expected to accelerate.
Sector Momentum: Mid-market software deals rose more than 20 percent to approximately $184 billion in 2025 (Baker Tilly). Business Services, Healthcare IT, HR & Staffing, and B2B Services all attracted sustained buyer interest.
What Buyers Are Looking For
The 2025 environment made clear that selectivity has increased. Diligence timelines are longer. Cybersecurity, customer concentration, and operational efficiency are examined earlier in the process. Companies that generate competitive deal processes today tend to have a clear growth narrative, clean financials, documented processes, and demonstrated operational readiness.
Sector positioning matters as well. Businesses operating in areas with active buyer interest and that can clearly articulate their path forward, are attracting stronger processes and more competitive terms.
The Current Window
PwC’s 2026 U.S. Deals Outlook anticipates a broad-based middle market recovery as regulatory clarity improves and economic growth solidifies. Conditions today, stabilizing rates, pent-up PE deployment, improving CEO confidence, and a still-constrained deal supply, represent a specific moment in the cycle.
Whether that window extends or tightens depends on macro and regulatory developments that remain in flux. Dealmakers and business owners who are prepared to move can take advantage of conditions that have not been this favorable in several years.
About SCG Global
SCG Global is a private equity fund based in Wexford, Pennsylvania. We focus on the lower middle market, employing a structured investment approach centered on partnership, operational discipline, and alignment of interests among investors, management teams, and stakeholders. We connect with qualified M&A advisors and business owners through the Axial platform.
If you are a business owner, M&A advisor, or investor evaluating the lower middle market, we welcome the conversation.
[Contact SCG Global →] https://app.iclosed.io/e/matsimmons/scg-edge-intro-call
References & Resources
- McKinsey & Company — Top M&A Trends in 2026 (February 2026) https://www.mckinsey.com/capabilities/m-and-a/our-insights/top-m-and-a-trends
- Deloitte — 2026 M&A Trends Survey: A Tale of Two Markets https://www.deloitte.com/us/en/what-we-do/capabilities/mergers-acquisitions-restructuring/articles/m-a-trends-report.html
- Morrison Foerster — M&A in 2025 and Trends for 2026 (January 2026) https://www.mofo.com/resources/insights/260115-m-a-in-2025-and-trends-for-2026
- Capstone Partners — Merger and Acquisition Outlook 2026 (December 2025) https://www.capstonepartners.com/insights/merger-and-acquisition-outlook-2026/
- Capstone Partners — Middle Market M&A Valuations Prove Resilient Despite Macroeconomic Disruption (April 2026) https://www.prnewswire.com/news-releases/capstone-partners-reports-middle-market-ma-valuations-prove-resilient
- PwC — US Deals 2026 Outlook https://www.pwc.com/us/en/services/consulting/deals/outlook.html
- Cleary Gottlieb — M&A: 2025 in Review and a Look Ahead to 2026 (January 2026) https://www.clearygottlieb.com/news-and-insights/publication-listing/ma-2025-in-review-and-a-look-ahead-to-2026
- Baker Tilly International — TMT Mid-Market M&A Set to Boom in 2026 (April 2026) https://www.bakertilly.global/news/tmt-mid-market-m-a-set-to-boom-in-2026-following-positive-2025
- Rochester Business Journal — Why 2026 Could Be a Breakout Year for Middle Market M&A (March 2026) https://rbj.net/2026/03/19/middle-market-ma-growth-2026/
- SCG Global on Axial — SCG Global: Private Equity Fund Profile https://www.axial.net/company/scg-global/
Important Disclosures
This content is published by SCG Global for informational and educational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any security, investment product, or advisory service. Nothing in this post should be construed as investment, legal, tax, or financial advice. All investment strategies involve risk, including the possible loss of principal. Past performance is not indicative of future results. Market data and third-party analysis referenced herein are sourced from publicly available reports and are believed to be reliable but are not independently verified by SCG Global. Forward-looking statements reflect current views and are subject to change without notice based on market, economic, and other conditions. SCG Global is a private equity fund and does not provide investment advice to the general public. Accredited investors and qualified purchasers interested in SCG Global’s investment activities should contact the firm directly for information regarding applicable offering documents, investment criteria, and regulatory requirements.
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