Quarterly Market Update True North Market Commentary

True North’s perspective on the merger and acquisition markets is shaped by first understanding the market for transactions of all sizes, followed by a sharp focus on the lower middle market transactions between $10 million and $250 million in enterprise value.

North American Market – Q2 2026

The North American Market across all buyers (PE, Family Office, Public, Private) showed slightly decreased activity and deal volume from Q1 2026, but still showed robust deal making compared to a year ago. Some of that dip is seasonal: second-quarter deal counts in North America have trailed the first quarter every year since 2021. In Q1 2026, deal volume was driven by very large transactions.

Source: PitchBook Q2 2026 Global M&A Report, as of June 30, 2026, North America, including estimated values

U.S. Private Equity Market – Q2 2026

For U.S. PE transactions of all sizes, Q2 2026 was a quarter of smaller checks, not fewer deals. Deal count rose 11.5% year-over-year from Q2 2025, but total deal value fell 37.5% from Q1 to $177 billion, the lowest quarterly level since late 2023. Different from the broad North American analysis above, which included all types of buyers, PE Buyers stayed busy; what disappeared was the appetite for large, debt-heavy transactions.

Two forces defined the quarter: energy prices and rate expectations tied to the Middle East conflict, and the AI-driven reset in software valuations. The Fed held rates steady in June with half the committee projecting a hike, and that hike arrived on September 16, when the Fed raised its target range 25 basis points to 3.75% to 4.00%. Through the quarter, capital kept moving toward smaller transactions, add-on acquisitions, and businesses built on physical operations. Further rate activity could promote interest in lower middle market transactions. No segment retrenched harder than software, where deal value fell 65.7% year over year as buyers reassess how AI will reshape the sector’s economics.

Q2 2026 closed with approximately 2,384 U.S. private equity transactions. Sponsors stayed active but wrote much smaller checks: the median transaction held near recent highs while the average fell by nearly half. Add-ons remained the dominant buyout strategy at roughly 75% of all buyouts, platform buyout count fell by a third, and growth and expansion investing was the only category to increase. We read this as buyers repricing risk, not leaving the market: capital is concentrating in smaller, less leveraged, buy-and-build structures, and buyer appetite for well positioned middle market companies remained intact even as headline deal value fell.

What this means for Business Owners: The pullback was concentrated in the largest, most debt-dependent transactions. Buyer appetite for well-prepared middle market companies, whether as add-ons, new platforms, or growth investments, stayed intact. Clean financials, a clear growth story, and management continuity remain the price of entry. If your business is built around physical operations (manufacturing, distribution, infrastructure, utilities-adjacent services), sponsor demand remains strong. If your business sells software, expect a more measured buyer set.

Middle Market Valuations: What Your Business is Worth

July 2026

FORT WAYNE METALS  |  FORT WAYNE, IN

Axel Johnson Inc., a New York-based, family-owned investment company, completed its acquisition of Fort Wayne Metals, the Fort Wayne-based manufacturer of precision wire and wire-based materials for medical devices and other demanding applications, one day after quarter end. The transaction places one of northeast Indiana’s flagship advanced manufacturers with a long-term, permanent-capital owner. Terms were not disclosed.

Source: Inside INdiana Business