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Q1 2026 Middle Market M&A Report

Q1 2026 M&A Market Data — Westlake Securities
Q1 2026 Key Data Points
7.3x
Avg. TEV/EBITDA
↑ Above 2025 Full-Year
3.5x
Avg. Total Debt/EBITDA
Platform Buyouts
Leverage ticking up
7.3%
Avg. Senior Debt Pricing
↓ Lowest since 2022
Three Q1 Takeaways
01
Deal Volume and Multiples Moved Up Together
Buyers are active, credit conditions are improving, and well-positioned businesses are generating competitive interest. The most constructive financing environment for middle market transactions in several years.
02
Manufacturing Led; Healthcare Held Premium
Manufacturing averaged 7.2x in Q1, up from 6.6x for full-year 2025 — the sharpest sector reversal in the recent series. Healthcare held steady at 8.5x. Platform-grade assets remain in high demand.
03
Preparation Determines Outcome
The quality premium widened. Buyers rewarded businesses with margin durability, clean reporting, and operational depth. This is not a "growth at any cost" market.
TEV/EBITDA by Sector — YTD 2026

Sector performance diverged meaningfully in Q1. Healthcare Services held its premium at 8.5x while Manufacturing posted the sharpest reversal in the recent series — up from 6.6x for full-year 2025 to 7.2x in Q1 alone. Business services cooled modestly at the lower end of the market while platform-grade assets remained in high demand across all sectors.

Health Care Services
8.5x
Retail
7.6x
Manufacturing
7.2x
Business Services
7.0x
Distribution
6.7x
Technology
5.2x

Source: GF Data — As of May 2026  |  N=5,731 total transactions

Credit Market Conditions
Senior Debt Pricing — Q1 2026
7.3%
Down from 8.1% in Q1 2025. Lowest reading since 2022.
Subordinated Debt — Q1 2026
11.8%
All-in pricing declined to 14.9% in 2025, driven by reduced PIK and warrant-based returns.
SOFR — May 2026
3.6%
Down from 3.9% at year-end 2025. Three Fed cuts delivered in 2025.
Platform Leverage
3.5x
Avg. total debt/EBITDA for platform buyouts. Ticked up from prior periods.
PE Dry Powder & Deployment Pressure
$1T+
Total PE Dry Powder
Record levels sustaining M&A activity despite macro uncertainty.
$800B+
2021–2024 Vintage Capital
Nearing end of 4-year investment window — creating a catalyst for competitive deal activity.
$1.83T
PE Capital Raised, 2021–2025
Sustained LP confidence through macroeconomic uncertainty.
80
Deals Reported — Q1 2026
Held steady at multi-year averages with unreported transactions factored in.

SOURCES: WESTLAKE SECURITIES / GF DATA / PITCHBOOK

Westlake Research & INSIGHTS

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