InsightsM&A outlook

Mid-Market M&A at Mid-Year: €412 Billion of Dry Powder Meets a Seller's Preparation Problem

July 2026Alexander Vogel7 min read

Halfway through 2026, the mid-market presents a striking contradiction. Capital is abundant: European private equity holds roughly €413 billion of dry powder, European private debt another €88 billion, and the global PE and VC ecosystem more than $2 trillion. Sector deal records are falling - healthcare tracking toward its strongest year since 2019, business services volume up 21% from its trough, logistics logging two dozen acquisitions in a single month. And yet European PE deal value fell sharply in the first half, with deal counts down and average sizes up. Buyers are not retreating. They are selecting.

Three forces define the half

First, the exit backlog is finally moving. Sponsors holding 2019-2021 vintage assets have accepted more realistic valuations to return capital to investors, releasing postponed processes back into the market and improving price alignment between buyers and sellers.

Second, selectivity has replaced momentum. Across every sector we cover, the same divide: prepared companies with recurring revenue, management depth and clean data attract multiple bidders at premium multiples; everything else waits. In software the spread runs from 3-4x ARR to 7-10x. In industrials, automation-linked assets clear while generalists sit. The market is not weak - it is discriminating.

Third, thematic capital is concentrating. AI durability in software, physical AI in industrials, dispatchable power in energy, recurring-volume logistics, platform consolidation in services: buyers arrive with a thesis and pay for the companies that fit it precisely.

Our expectation for H2

The ingredients for a stronger second half are in place: abundant dry powder that must deploy, a backlog of delayed processes, large-cap pipelines rebuilding, and narrowing valuation gaps. Geopolitics and rates remain the standing caveats. For owners, the practical conclusion is unchanged but sharper: the buyers of 2026 reward preparation more than any market we have advised in - and punish its absence more efficiently. A company that begins preparing now meets the deployment wave on its own terms.