Private equity firms are expected to step up middle-market M&A activity in 2026 as confidence among dealmakers improves, according to a report by Reuters citing Citizens Financial. The bank’s survey of around 400 middle-market company executives and private equity professionals found that 58% expect M&A volumes to increase this year, following a 2025 dominated by large-cap transactions.
Optimism is reportedly being driven by expectations of stronger economic growth, interest rate cuts, and more favourable valuations, according to Jason Wallace, the firm’s head of M&A. Valuations are expected to rise particularly in technology, media and telecommunications, as well as financial services, real estate, lodging, and leisure.
Private equity engagement has risen sharply, with 86% of executives reporting confidence in M&A decision-making in the fourth quarter, up from 48% in the first quarter. Wallace noted growing deal flow among financial firms, particularly in wealth management.
More than half of private equity firms expect to initiate transactions in the second quarter, ahead of the US midterm elections, while 39% said interest in artificial intelligence-related companies or assets is likely to drive deal activity.
