Middle Market M&A Valuations Index

Middle Market M&A Valuations Prove Resilient Despite Macroeconomic Disruption as Confidence Builds Entering 2026

Capstone Partners’ annual Middle Market M&A Valuations Index examines EBITDA purchase multiples for middle market businesses. Leveraging market research and Capstone’s proprietary data, we seek to provide business owners and market participants greater transparency into the pricing dynamics of completed middle market merger and acquisition (M&A) sale processes.

Middle Market Deal Activity Reprices After Volatility While Strategic Conviction and Quality Assets Anchor the Recovery

Dealmaking conditions began to normalize entering 2025 as buyers regained confidence after facing significant pressure throughout 2024. Prior to Liberation Day, Q1 2025 middle market M&A volume rose 10.3% year-over-year (YOY) compared to a 15.8% YOY decline in Q1 2024. At the same time, deal values rose 21.2% YOY in Q1 2025 compared to a 4% YOY contraction in Q1 2024, demonstrating a clear upturn in M&A market activity to start 2025. However, Liberation Day immediately stunted this momentum as industries reliant on global supply lines delayed dealmaking. The response from buyers was violent and swift. This collapse created a dramatic valuation gap in M&A dealmaking between buyers and sellers, forcing Q2 transactions to be re-priced, restructured, or abandoned outright as uncertainty soared and due diligence timelines stretched far beyond historical norms. By mid-2025, the Trump administration tempered parts of its tariff escalation and investors regained confidence. Firms began building strategies designed to thrive within geopolitical uncertainty, using M&A as a tool for resilience, expansion, and competitive positioning.

Amid the tumultuous year, M&A valuations remained resilient for quality assets and insulated sectors. Average M&A valuations settled at 9.8x EV/EBITDA in 2025, up from 9.4x in 2024 and 9.0x in 2023. The Aerospace, Defense, Government & Security (ADGS), Business Services, Energy, and Technology, Media & Telecom (TMT) industries all posted YOY improvements in average purchase multiples, reflecting selective areas of strength. Agriculture also saw higher average multiples overall, illustrating a push-and-pull dynamic in which high-margin Agriculture sectors buoyed valuations, even as several distressed transactions weighed on specific subsectors. Investor appetite remained robust and was matched by disciplined execution. More than a quarter (27.4%) of advisors surveyed by Capstone anticipate M&A transaction multiples in 2026 to rise compared to 2025, according to Capstone Partners and IMAP’s 2025-2026 Trends in Global M&A Survey Report. However, most (66%) advisors foresee little to no change in M&A multiples in 2026. Across all investment bankers surveyed, the average typical and premium M&A EBITDA multiples are expected to reach 6.8x and 9.8x, respectively—an uptick from the 2025 outlook. Lower-quality assets saw buyers accelerate diligence while the upper end of the market remained healthy, competitive, and reminiscent of more robust transaction environments. This was reflected in the rebound of deals closing in the low double-digit EBITDA range, which comprised 40.7% of disclosed multiples in 2025 compared to 31.6% of 2024 transactions.

In 2025, private equity (PE) continued to do what it has done historically—adapt. High-quality portfolio companies remained the core component of sponsor exits and enabled these players to maintain internal rate of return (IRR) levels, according to Capstone Partners’ bi-annual Middle Market Private Equity Index Report. Add-on acquisitions remained the majority of sponsor activity at 58.2% in 2025 though this share has declined from 61.3% in 2024. The buy-and-build model has evolved from a distinct strategy to becoming the industry’s default operating framework. Sponsors showed a strong preference for platforms equipped with a clear integration roadmap, defined targets, and modern systems to support seamless onboarding of subsequent acquisitions. Additionally, leverage decreased meaningfully, with average net debt-to-EBITDA falling from 6.2x in 2024 to 3.4x in 2025, indicating lesser reliance on debt financing than in prior years. As debt usage decreased, interest coverage weakened, with the average EBIT/interest expense ratio falling to 2.9x from 6.0x in the prior year, suggesting higher interest burden relative to operating earnings. Despite the severity of Liberation Day interruptions, the middle market appears positioned for a steady M&A re-acceleration in 2026, supported by stabilizing valuations, continued sector‑level resilience, healthier balance sheets, and rising investor demand for high-quality opportunities.

Middle Market M&A Valuation Trends by Industry

The report includes M&A volume, valuation multiples, and trends for 12 key industries where Capstone Partners maintains designated teams with deep sector expertise:

• Aerospace, Defense, Government & Security
• Agriculture
• Building Products & Construction Services
• Business Services
• Consumer
• Energy, Power & Infrastructure
• FinTech & Services
• Healthcare
• Industrials
• Industrial Technology
• Technology, Media & Telecom
• Transportation, Logistics & Supply Chain

Capstone’s Outlook for 2026

Rate cuts and stabilizing inflation have improved business owners’ economic outlook for the next 12 months. A combined 50.1% of business owners in 2025 (responses gathered between August and October 2025) reported a very or somewhat positive outlook on the U.S. economy over the next 12 months, indicating a shift in the cautious economic position displayed by CEOs in recent years, according to Capstone’s 2025 Middle Market Business Owners Survey. This trend is consistent both upstream and downstream from the U.S. economy, with 53.8% of respondents sharing a positive outlook on the global economy and 55.2% expressing optimism within their local economies. Further interest rate cuts, the resolution of ongoing trade and geopolitical conflicts, and lessening of inflationary pressures will prove critical to maintaining this upward momentum in outlook.

Based on Capstone’s data, financial services demand has tied directly to business owners’ primary initiative over the next 12 months. Of note, the lion’s share (44%) of owners anticipates a need for growth strategy support services to facilitate organic and inorganic expansion. An additional 30.6% of owners need accounting and audit support to shore-up cash flows and establish financial stability. Similarly, 29.9% of CEOs require equity capital advisory services to support operational initiatives and business expansion plans. In addition, 27.7% of CEOs demonstrated an interest in accessing relevant industry research to keep up with emerging industry trends, complete competitor analyses, and track capital markets activity in their space.

Over the next year, performance improvement support is slated to be increasingly critical in business owners’ operational initiatives, especially for those seeking efficiency gains. Organic growth strategies have remained at the forefront for 2026; however, the share of CEOs planning an M&A transaction ticked up from the prior year as owners have shown heightened exit preparedness.

Middle Market M&A Valuations Index – Report Download

Complete the form below to request the full publication, including:

• Commentary on the operating performance of target companies sold in 2025 compared to prior years.
• Analysis of current pricing dynamics, including average 2025 EBITDA multiples by industry and transaction type.
• Commentary on industry-specific middle market M&A volume and buyer breakdown.

Want to find out what your company could sell for?

Our industry coverage spans several verticals across the middle market, each comprising multiple subsectors. If you are an owner or investor of a private middle market company, we invite you to contact us today to speak to a specialist in your space and receive an informal business valuation, advice on a timeline to sell or recapitalize, and actionable steps you can take to help maximize shareholder value.