Private equity leaders and corporate executives are growing more confident about mergers and acquisitions, setting up a busier pipeline for 2026. A new survey indicates improving sentiment across both buyers and sellers, with many preparing for more active dealmaking as financing conditions stabilize and strategic priorities sharpen. The results suggest a wider set of transactions next year as firms move to deploy capital and companies revisit postponed plans.
The report points to a shift in tone after a period of slower activity. Dealmakers expect steadier interest rates, better earnings visibility, and clearer pricing to support negotiations. While caution remains, the outlook marks a step up in risk appetite for transactions across middle-market and larger deals.
Background: From Slowdown to Reset
The last two years brought a mix of rising borrowing costs, uneven valuations, and cautious boards. Many processes were delayed, and exit timelines stretched. Buyout funds held cash while waiting for better financing terms and more reliable forecasts from targets.
That pause created a backlog of potential transactions. Corporate carve-outs were prepared but not launched. Founder-led businesses waited for calmer markets. Funds faced pressure to return capital but hesitated to sell at discounted prices. The survey now suggests that this backlog is moving closer to execution in 2026.
“Survey shows stronger optimism among PE firms and companies fueling broader 2026 deal pipeline.”
Why Optimism Is Rising
Respondents cite improving financing availability and a clearer path for valuations. Lenders have eased some terms, and credit markets are open for high-quality borrowers. Corporate confidence has improved as supply chains normalize and visibility on orders and margins gets better.
Private equity funds are also recalibrating holding periods and exit routes. Secondary sales, sponsor-to-sponsor deals, and partial exits are becoming more acceptable. If public markets remain receptive, an IPO window in 2026 could add another exit option for a small set of assets with strong growth.
What It Means for Deal Activity
Deal pipelines should widen across add-ons, platform acquisitions, and corporate carve-outs. Add-ons may lead early, as they need smaller checks and offer quicker synergies. Carve-outs could follow, as large companies streamline portfolios and use proceeds to invest in core units.
Sellers are expected to meet buyers closer to mid-cycle multiples, narrowing the valuation gap that stalled many auctions. More data-driven diligence and earn-out structures could help bridge disagreements on future growth.
Advisory firms report growing preparation work. Many are refreshing financials, standing up separation plans for carve-outs, and lining up financing partners in advance of a formal launch.
Risks That Could Slow Momentum
Despite improving sentiment, several risks could delay plans:
- Interest rates staying higher than expected, raising deal costs
- Earnings disappointments that weaken seller confidence
- Regulatory scrutiny that adds time and complexity
- Geopolitical shocks that hit financing or trade
If one or more risks materialize, firms may prioritize add-ons and structured deals while deferring larger buyouts.
Sectors to Watch in 2026
Defensive areas with steady cash flow are likely to remain active. Technology-enabled services and software with recurring revenue may draw interest, provided pricing aligns with growth. Health care services and life sciences tools could see steady bid activity, though regulatory diligence will be tight. Industrial technology, energy transition services, and specialty manufacturing may attract buyers seeking margin improvement and near-term efficiency gains.
How Firms Are Preparing
General partners are building relationships with lenders early and aligning deal structures with cash generation. They are investing in diligence for operations, cybersecurity, and supply chains to support conviction. Corporate teams are outlining sell-side separation plans, including stand-alone cost models and transition services, to speed execution.
Boards are also refreshing strategy. Many are assessing which businesses are core and which could be divested to fund growth. That clarity can unlock deals that stalled when markets were volatile.
The survey’s message is clear: confidence is returning to dealmaking. If rates stabilize and earnings hold, 2026 could bring a broader mix of transactions and more exits. Buyers and sellers are laying the groundwork now, upgrading diligence, and sharpening valuation views. The next test will come as formal processes launch after budgeting cycles. Watch for add-ons to lead, carve-outs to follow, and a cautious but upward trend in larger buyouts as financing conditions allow.
