M&A Market Intelligence · Updated October 21, 2026Windsor DrakeData sources: McKinsey, PwC, Bain & Company, Dealogic, LSEG
By Jeff Barrington, Managing Director
Short answer
Technology has the highest M&A activity by both value and deal count. Technology, media and telecom deals reached $1.08 trillion in 2025, 30% of global value, ahead of energy, power and infrastructure at $832 billion and financial services at $660 billion. Technology still led in Q3 2026, when EY-Parthenon counted 155 US technology deals of $100 million or more, the most of any sector, worth about $125 billion, 41% less than a year earlier.
The 2025 Rebound
The M&A market in 2025 delivered a decisive rebound. Global deal value surged 43% to $4.7 trillion, 20% above the ten-year average, making it the second-highest year on record. U.S. deal volume alone reached approximately $2.3 trillion, up 49% from 2024. Deals exceeding $10 billion surged 120% year-over-year and accounted for nearly one-third of total global value.
Volume, however, stayed flat. The pattern is clear: fewer deals, larger deal sizes, and more strategic conviction behind each transaction. Companies are not acquiring for incremental growth. They are repositioning entire platforms around AI, infrastructure, and capability gaps that organic investment cannot close fast enough.
For founders of private companies in the $5M to $100M enterprise value range, this environment creates a favorable backdrop. Acquirers across technology, financial services, healthcare, and industrials are deploying capital into strategic acquisitions with more urgency than at any point since 2021. Understanding which sectors are driving that activity, and why, is essential context for anyone evaluating the timing of a potential sale process.
Sector Breakdown
Four sectors led global M&A by disclosed deal value in 2025. The table below ranks them, with the year-over-year change and share of total global deal value where separately disclosed.
| Technology, Media & Telecom | $1.08 trillion | +66% | 30% | AI infrastructure, cybersecurity, cloud security |
| Energy, Power & Infrastructure | $832 billion | +12% | 18% | AI compute demand, data centers, renewables |
| Financial Services & Fintech | $660 billion | +43% | 14% | Fintech consolidation, banking, private credit |
| Healthcare & Life Sciences | ~$490 billion | services +50% | , | Healthcare services, biopharma pipelines, suppliers |
Share of total global M&A value shown where separately disclosed; healthcare not separately broken out by all sources. Healthcare deal volume fell ~22% in H1 2025 while services deal value rose ~50%. Sources: McKinsey, PwC, Bain & Company, Dealogic, LSEG.
01
Accounted for 30% of global deal value in 2025 with 26 megadeals. AI infrastructure, cybersecurity platform consolidation, and cloud security drove the largest transactions. Software represented 65% of TMT deal value. Cybersecurity M&A reached $63.3B through Q3 alone.
02
Represented 14% of global deal value with 13 megadeals in banking alone. Fintech consolidation accelerated as traditional institutions acquired digital capabilities. IPOs from Circle, Klarna, and Figma reopened exit pathways. Private credit reached $1.7 trillion under management.
03
Value grew 12% but share of global deal activity declined from 23% to 18%. AI compute demand is reshaping energy M&A. BlackRock/MGX’s $40B Aligned Data Centers deal marked the convergence of power infrastructure and technology. Global renewables M&A reached $43B in H1 2025.
04
Volume declined 22% in H1 2025, but healthcare services deal value rose 50% as acquirers pursued larger, strategic transactions. Life sciences supplier deal values surged 85% to $28.3B. Biopharma pipeline acquisitions and digital health platforms attracted sustained buyer interest.
Technology
Technology M&A surged 66% year-over-year to approximately $1.08 trillion in 2025, driven by AI infrastructure, cybersecurity consolidation, and data center capacity. The sector accounted for 30% of global deal value with 26 megadeals, the highest of any industry.
The defining characteristic of the current cycle is the bifurcation between AI-native and legacy technology assets. Companies with genuine AI capabilities, proprietary models, specialized infrastructure, measurable AI-driven revenue, command 12 to 15x EBITDA multiples, a 40% increase from 2024. Traditional software companies facing disruption from AI alternatives trade at compressed multiples, creating a widening valuation gap.
The four largest hyperscalers, Amazon, Google, Microsoft, and Meta, deployed over $350 billion in AI-related capital expenditure in 2025. This investment cascade is pulling M&A activity toward compute infrastructure, data center assets, and the companies that enable AI workloads at scale. BlackRock and MGX’s $40 billion acquisition of Aligned Data Centers was among the largest private infrastructure deals in history. At the lower end of the market, acquirers are targeting applied AI companies, vertical-specific platforms, agentic AI tools, and workflow automation solutions, where recurring revenue models and enterprise adoption create clear valuation anchors. These are the businesses most relevant to founders in the lower middle market AI space.
Cybersecurity M&A set records with 234 transactions through Q3 2025, totaling $63.3 billion in disclosed deal value. Palo Alto Networks’ $25 billion acquisition of CyberArk and Google’s $32 billion deal for Wiz reflected the push toward integrated, AI-ready security platforms. Cybersecurity companies with genuine AI capabilities now command 12 to 14x revenue multiples, a 25% premium over traditional security software.
Vertical SaaS companies with durable revenue models and strong unit economics remain highly attractive acquisition targets. The market favors businesses where AI augments existing capabilities rather than threatening to replace them. Private equity accounted for over $17 billion in technology deal value in Q1 2025 alone, and platform acquisitions followed by bolt-on strategies continue to be the dominant PE playbook in the sector.
Financial Services
Financial services M&A climbed 43% to $660 billion in 2025, maintaining the sector’s position at approximately 14% of global deal value. Banking consolidation produced 13 megadeals, driven by the dual imperatives of regulatory cost management and digital transformation.
The fintech subsector is where the most consequential lower middle market activity is occurring. Traditional financial institutions continue acquiring technology-first companies to modernize payment processing, compliance infrastructure, lending platforms, and wealth management tools. This is not speculative positioning. It is an operational necessity as customer expectations shift permanently toward digital-first delivery.
The reopening of IPO markets, highlighted by successful debuts from Circle, Klarna, and Figma in 2025, provides an additional exit pathway for fintech founders. But for companies in the $10M to $50M enterprise value range, strategic sale to a larger financial services acquirer or PE platform remains the highest-probability exit with the most favorable economics. The buyer universe for fintech companies is both deep and well-capitalized. Private credit markets reached $1.7 trillion under management, and financial sponsors are increasingly using private credit structures to finance acquisitions in this space, a development that has expanded the set of credible buyers for fintech platforms that generate stable, recurring revenue.
The best time to sell a fintech company is when strategic buyers are actively deploying capital into the category, not when the market cycle forces a transaction. That window is open now.
Healthcare & Life Sciences
Healthcare M&A presented a nuanced picture in 2025. Overall deal volume declined approximately 22% in the first half, and total transaction value fell 25% year-over-year. But the headline numbers obscure a more instructive pattern.
Healthcare services saw 25% fewer transactions, but total deal value rose by half, indicating a decisive shift toward larger, strategic acquisitions. This is consistent with what we observe across the lower middle market: buyers are more selective, but they are willing to pay full valuations for businesses that meet their strategic criteria. Life sciences supplier deal values surged 85% year-over-year to $28.3 billion. Large pharmaceutical companies continue acquiring companies with strong pipelines in specialized therapeutic areas, novel drug delivery technologies, and biologics platforms. In EMEA, healthcare was the fastest-growing sector for M&A activity.
For healthcare services founders, the takeaway is direct: the buyer universe has narrowed but deepened. Private equity platforms that acquired healthcare services companies over the past five years are now executing add-on acquisition strategies. Companies with recurring revenue, defensible market positions, and clean financials are being acquired at premium multiples relative to the broader middle market. Medline’s $7.2 billion Nasdaq debut in December 2025, the largest IPO in nearly five years, underscored investor appetite for scaled healthcare assets.
Industrials, Business Services & Consumer
Private equity acquirers represented 42% of total capital invested in global industrials M&A in the first half of 2025, a significant increase from 25% in 2024. This shift reflects PE firms’ conviction that industrial businesses with defensible market positions, recurring service revenue, and automation potential are undervalued relative to technology assets.
Business services M&A remains one of the most active segments in the lower middle market. PE-backed platform companies in staffing, facilities management, IT services, and professional services are executing disciplined buy-and-build strategies. Targets with $2M to $5M in EBITDA, stable customer relationships, and geographic density are being acquired at 5 to 7x EBITDA, with premiums for companies that bring technology-enabled service delivery.
Industrial manufacturing transactions are increasingly driven by supply chain resilience, nearshoring, and automation. Companies that have invested in operational efficiency and reduced customer concentration are well-positioned for premium exits. Defense and aerospace M&A is expected to build through 2026 as rising global defense budgets and modernization programs create sustained demand for specialized suppliers.
Consumer markets deal values rose 41% in 2025 while deal volumes stayed flat. The pattern mirrors the broader market: fewer transactions, higher conviction, and larger deal sizes. Kimberly-Clark’s $48.7 billion acquisition of Kenvue was the defining transaction of the year in the sector. Consumer businesses with strong brands, defensible distribution, and recurring purchase behavior continue to attract both strategic and financial buyers.
What Is Driving Activity
Three structural forces are shaping the M&A environment entering 2026. They apply across sectors and directly influence the timing, positioning, and pricing of lower middle market transactions.
01
AI is not just a technology sector theme. It is reshaping deal strategy across industrials, financial services, energy, and healthcare. Among the 100 largest corporate M&A transactions announced in 2025, about a third cited AI as part of the stated strategic rationale, a share PwC found fell to 17% in the first half of 2026. Companies are acquiring AI capabilities rather than building them internally because the competitive window for organic development has compressed. For founders of technology-enabled businesses, the buyer universe for companies with defensible AI capabilities extends well beyond the technology sector.
02
In 2025, scope deals, transactions designed to accelerate revenue growth by entering new markets, categories, or capabilities, accounted for 60% of large strategic transactions, the highest share on record. This is a fundamental shift from the scale-driven consolidation that dominated prior cycles. Buyers are not primarily seeking cost savings. They are seeking growth capabilities that would take years to build organically. This benefits differentiated, founder-led companies with unique market positions, specialized technology, or proprietary customer relationships.
03
Corporate divestitures reached $1.6 trillion in 2025, up 30% and the highest level since 2021. Large companies are shedding non-core divisions to fund strategic repositioning. Many of these divested assets become platform acquisition targets for PE firms building lower middle market portfolios. This divestiture activity expands the buyer universe for founders selling companies that can serve as add-on acquisitions or standalone platforms for newly formed investment vehicles.
What This Means For Founders
The current M&A environment is structurally favorable for founder-led companies in the $5M to $100M enterprise value range across the sectors outlined above. Several conditions are aligned simultaneously.
Strategic buyers are deploying capital with urgency. Competition for AI capabilities, digital infrastructure, and platform growth is compressing decision timelines. Companies that would have spent 12 to 18 months evaluating an acquisition in 2023 are now moving in 6 to 9 months. Private equity firms hold record levels of committed but undeployed capital. The pressure from limited partners to generate returns is translating into active deal sourcing and faster execution across technology, business services, healthcare, and financial services.
Valuation multiples for high-quality assets remain at or near cycle highs. Companies with recurring revenue, low customer concentration, strong management teams, and demonstrable growth trajectories are commanding premium EBITDA multiples. This is not guaranteed to persist. Interest rate uncertainty, trade policy volatility, and market corrections can shift buyer sentiment quickly.
The practical implication: founders who have been considering a transaction in the next 12 to 24 months should evaluate whether the current window represents the optimal timing. Exit readiness work, financial reporting, management depth, customer diversification, adjusted EBITDA documentation, takes 6 to 12 months to complete properly. Starting that preparation now positions a company to execute a process during a period of elevated buyer activity and favorable pricing.
FAQ
Technology leads by both deal value and deal count, accounting for approximately 30% of global M&A value in 2025 at $1.08 trillion. AI infrastructure, cybersecurity, and enterprise software are the most active subsectors. Technology still led US deals of $100 million or more by value and count in Q3 2026, with 155 deals worth about $125 billion, per EY-Parthenon. In 2025, energy, power and infrastructure ranked second by deal value at $832 billion (though declining as a share of total activity), followed by financial services at $660 billion and healthcare at approximately $490 billion.
Global M&A deal value reached approximately $4.7 to $4.9 trillion in 2025, depending on the data source, representing a 40 to 43% increase from 2024. This made 2025 the second-highest year for M&A on record. U.S. deal volume alone reached approximately $2.3 trillion, up 49% from the prior year. Deal volume stayed largely flat while average deal size increased, reflecting a market driven by fewer, larger, higher-conviction transactions.
The consensus among institutional advisors and research firms is that M&A activity will remain elevated in 2026, though growth rates will moderate from 2025’s rebound. EY-Parthenon projects U.S. corporate M&A deal volume for transactions over $100 million rising 11% in 2026, with private equity volume flat, in its June 2026 forecast. McKinsey, Bain, and PwC all point to sustained momentum driven by AI-related deal activity, continued divestitures, and private equity deployment pressure. Downside risks include trade policy uncertainty, interest rate volatility, and geopolitical disruption.
Three factors are driving PE deal activity: limited partner pressure to deploy committed capital, the availability of private credit financing at favorable terms, and portfolio reshaping through both platform acquisitions and add-on strategies. PE acquirers represented 42% of capital invested in industrials M&A in H1 2025, up from 25% the prior year. Technology, business services, and healthcare services remain the primary PE target sectors in the lower middle market.
Elevated M&A activity increases the number of active buyers competing for acquisition targets, which creates competitive tension in a well-run sell-side process. When multiple buyers are pursuing the same asset, sellers benefit from higher valuation multiples, more favorable deal terms, and faster execution timelines. Conversely, periods of reduced M&A activity compress the buyer universe and shift pricing power toward acquirers. Current market conditions favor sellers across technology, financial services, healthcare, and business services.
Across sectors, acquirers are prioritizing companies with recurring revenue, low customer concentration (no single customer above 15 to 20% of revenue), a capable management team that operates independently of the founder, demonstrable growth trajectory, and clean financial reporting. In technology specifically, AI capabilities, cybersecurity expertise, and vertical software specialization command the highest premiums. In financial services, payments infrastructure, compliance technology, and embedded finance platforms are most actively pursued.
The optimal time to sell is when three conditions align: your company is performing well operationally, the buyer universe in your sector is actively deploying capital, and your personal readiness is confirmed. Exit readiness preparation takes 6 to 12 months, so founders who believe they may want to transact within the next 12 to 24 months should begin that process now. M&A markets are cyclical. The current environment of elevated activity and strong valuations is favorable but not permanent.
PwC’s June 2026 outlook, extrapolating LSEG data through May, estimated about 42,000 deals worldwide for 2026, down 13% from 2025. Value is concentrated in fewer, larger deals, with transactions above $5 billion making up 48% of 2026 deal value against 39% in 2025 and 26% in 2024. In the US, EY-Parthenon reported deal volume up 9% from July through September 2026.
In EY-Parthenon’s data for US deals of $100 million or more in Q3 2026, insurance deal value rose 427% and media and entertainment 317%, while life sciences value rose 35% on 66% more deals. Technology value fell 41% as volume rose 12%, a shift toward smaller deals, and oil, gas and chemicals value fell 40%. Technology still had the highest value and count.
Private equity drives much of it. PE acquirers put up 42% of the capital invested in global industrials M&A in H1 2025, up from 25% in 2024, and business services targets with $2 million to $5 million of EBITDA trade at 5x to 7x EBITDA. PwC’s June 2026 outlook said industrial assets less exposed to AI disruption were drawing renewed attention, and GF Data put the lower middle market average at 7.0x EBITDA across 85 deals in Q2 2026.
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