Houston's Middle Market Momentum: The Businesses That Build, Power, and Supply the Nation Are in Demand

Spend enough time in deal conversations across Texas and a pattern emerges: when buyers and lenders talk about where they want exposure, Houston keeps coming up. Not the Houston of a single commodity cycle — the Houston that builds data centers, moves cargo, fabricates steel, wires substations, and automates buildings. That Houston is having a moment, and the middle market is at the center of it.

We've closed three transactions for Houston-area companies in recent months, all in the industrial economy — electrical solutions, energy management, and chemical services. Each process told us something about how capital views this market right now. The short version: demand for well-run, founder-owned businesses tied to the nation's infrastructure is as strong as we've seen it.

Anchor Investments Are Pulling Demand Through the Supply Chain

The Greater Houston Partnership forecasts 30,900 new jobs for metro Houston in 2026, pushing the region to a record 3.5 million total jobs. The headline number is more moderate than the roughly 50,000-job annual pace of recent years, but the composition matters more than the total: construction is projected to be the second-largest contributor at 6,100 new jobs, behind only health care.

The investment announcements behind that forecast are hard to ignore. Roughly a third of the region's new business announcements in 2025 involved manufacturing companies. Foxconn is investing $450 million to expand AI server production in North Houston. Inventec has committed more than $250 million to an AI and electronics manufacturing plant. And Eli Lilly is building a $6.5 billion active pharmaceutical ingredient facility at Generation Park — roughly one million square feet, more than 600 permanent jobs, and thousands of construction jobs over the build.

For middle market owners, these anchor investments aren't abstractions. Every one of them pulls demand through the supply chain — electrical contractors and distributors, fabricators, specialty chemical providers, equipment services, logistics, and the trades that build and maintain it all.

The Grid Is the Growth Story

Nothing illustrates the scale of what's happening in Texas better than electricity demand. ERCOT projects summer 2026 peak load between roughly 90,500 and 98,000 megawatts — already territory that would break the all-time record of 85,508 MW set in 2023. Its long-term filings go much further: when large industrial and data center load requests are included, peak demand could approach 278,000 MW by 2029 and 368,000 MW by 2032, more than triple today's record.

Even if only a fraction of that pipeline materializes, the implication for the electrical value chain is enormous. ERCOT expects roughly 8,800 MW of new gas-fired generation by the end of 2029, and every megawatt of new load and generation requires switchgear, transformers, transmission work, controls, and the specialized firms that design, distribute, install, and service that equipment. This is exactly the demand environment behind buyer appetite for electrical and power-adjacent businesses — something we saw firsthand advising TEC Group, a Houston-based electrical manufacturers' representative serving markets that include data center infrastructure.

The Port Keeps Setting Records

Port Houston closed 2025 with the best year in its history: 54.5 million short tons across its public terminals, up 3%, and a record 4.3 million TEUs in container volume, up 4%. The momentum carried into 2026 — the port handled 2.22 million TEUs in the first half, its largest first-half container volume ever. Port Houston handles roughly 60% of U.S. resin exports, and that share is expected to grow as new packaging capacity comes online.

The port is investing to keep pace, completing a new 1,000-foot wharf at Bayport that adds more than 500,000 TEUs of capacity, alongside new cranes and terminal technology. For the region's industrial and construction-related businesses, the Ship Channel remains what it has always been: a structural advantage that keeps freight, feedstock, and export demand flowing through Houston companies regardless of where the broader economy sits in the cycle.

Building the Buildout

Construction is projected to add more jobs in Houston in 2026 than any sector except health care. The pipeline behind that hiring spans data centers, manufacturing facilities, petrochemical and industrial work, and the public infrastructure serving a growing population. The labor demand is significant enough that Meta and Associated Builders and Contractors announced a $115 million partnership to train construction workers for AI data center projects, with a portion launching in Houston.

For owners of construction and construction-adjacent businesses — specialty contractors, building products, equipment, automation, and services — this is a demand backdrop worth taking seriously when thinking about timing. Buyers are paying attention to the same data.

Capital Is Moving — Selectively, and Toward Quality

The national middle market backdrop reinforces the local one. GF Data® reported 85 completed transactions in the second quarter of 2026, matching the first quarter and bringing first-half volume to 170 deals — three straight quarters within a single deal of one another, and a pace roughly 10% ahead of 2025. Pricing is holding as well: the first-half average sits at 7.1x TTM EBITDA, within a tenth of a turn of both full-year 2025 and 2024. Private equity dry powder remains north of $1 trillion, and pressure to deploy it — and to return capital to limited partners — keeps sponsors active in exactly the size range where most founder-owned Houston businesses sit.

Selectivity is the operative word. Buyers are disciplined on earnings quality, leverage, and sector dynamics. But when a well-positioned business in a favored sector comes to market, competition shows up quickly.