Here's what I'm seeing this week: the M&A market just hit a gear.

Global deals reached $4.39 trillion by mid-December 2025, up 45% from 2024, according tofresh data from OpenAI's Deep Research. The US drove this surge with $2.23 trillion in transactions, jumping 54% year-over-year. What catches my attention is Q3 deal count spiked 43% compared to last year.

With PE firms sitting on $1-1.2 trillion in dry powder, competition for quality businesses in our $500K-$10M EBITDA range is about to get intense. But we’ve been saying that for a while.

It’s why we built OutSearched.

PE Is Coming Downstream Hard

EY's latest report shows US M&A deal value jumped 111.5% year-over-year for $100M+ transactions. But here's the kicker: PE firms are now hunting smaller tuck-ins because theyneed to deploy capital.

Capstone Partners data confirms PE had 5 consecutive quarters of platform growth, paying an average 12.0x EV/EBITDA. Those are bigger deals, but it’s indicative of what’s happening downmarket. That's pushing independent sponsors and search funds further into proprietary deal flowterritory. We’ve been preaching.

On Twitter this week: "Searchfunds looking for $2-$5M deals not sustainable. PE coming downfor tuck-ins..." This is happening in real time and has been. Proprietary or bust if you’researching above $2M EBITDA and you need it to pencil.

This Week's Deal Activity Shows The Pattern

Notable Deals:

• 11:11 Systems acquired Ntirety, an Austin-based managed IT services company from TigerInfrastructure's portfolio
• Brightwood Capital bought the Museum of Illusions chain from Invera Capital Partners
• Cleanova acquired Airflotek and TES-Clean Air Systems, both industrial air-filtration businesses.
• Currier Plastics picked up Springboard Manufacturing and MOS Plastics, medical contractmanufacturers
• Fenceworks acquired Accurate Fence, an Atlanta-area permanent fence installer
• Gryphon Investors bought Safety Management Group, an Indianapolis-based safety andcompliance services provider
• H&MV Engineering acquired Cooke Power Services, a power grid infrastructure services firm in Amarillo, TX

The Search Fund Reality Check

I've been tracking this trend for months and posted about it on X: "The obvious endpoint here isthe failure of the Searchfund model. You're either self-funded or an Independent Sponsor. Notmuch left in the middle."

Walden M&A's outlook shows technology investments grew from 19% to 22% of PE deals. When PE firms have $1.2 trillion to deploy, and they're moving into tech services, compliance, and industrial niches, your traditional search parameters get squeezed.

The Fed expects 2 rate cuts in 2026 with a target range of 3.00%-3.25%. Lower rates plus PEdeployment pressure equals more competition for the deals you're seeing on auction platforms.

What This Means For Your Deal Sourcing

Here's what I'm seeing work right now: patience, persistence, and systems: "Brought a deal to abuyer we've been working for 8 months. Have a system, hang around the hoop, and be patient."

Eight months. That timeline tells you everything about today's market. Proprietary deal flow isn'tabout quick hits anymore. It's about systematic relationship building before businesses hit the market.

Kiplinger reports that PE firms are holding roughly $1 trillion in unsold portfolio companies. Theyneed tuck-ins and add-ons to create exit value. Secondaries are the move.

The sectors getting attention match what I'm seeing: IT services, safety compliance, industrial filtration, medical manufacturing, and power infrastructure. These aren't glamorous businesses, but they're profitable and scalable.

The OutSearched Advantage

This market shift is exactly why we built OutSearched. When $5B AUM PE firms are hunting inyour territory and auction processes get more competitive, proprietary deal flow becomes youronly sustainable edge.

I see buyers working 8-month timelines to develop relationships before businesses come to the table. That's not luck.

The data is clear: $4.39 trillion in global deals, PE sitting on $1+ trillion in dry powder, and 54% growth in US transactions. Your proprietary deal flow system needs to match this velocity, or you'll be fighting over the scraps that PE firms don't want.

“Hunting is not a matter of life or death; it is much more important than that.” - Fredrik Hagblom