The M&A market ended 2025 with momentum and uncertainty.

Global deal value hit $4.9 trillion, up 40% from 2024, the second-highest year on record.

A Tale of Two Markets

Large-cap deals came roaring back in late 2025. Large-scale add-ons dominated private equity activity in Q2 2025. But the lower middle market? Different story. Dealflow was good. Quality was bad. Discipline and process wins. And here is where proprietary matters. 

Deloitte's latest survey calls it a "dual market" with large acquirers chasing big targets while middle market buyers find opportunities in a less crowded field. If you're competing for $10M-$250M EV deals, you're not fighting the same crowd as the private equity giants. That's actually good news.

And 66% expect pipeline volume to increase in 2026. The quality is concentrated where you look for it.

Credit Conditions and Deal Economics

The Federal Reserve is expected to deliver two more rate cuts in 2026, bringing the target range to 3.00%-3.25%. That's meaningful for deal economics. Cheaper debt means more buyers can justify valuations.

The middle market is likely to see a steady, gradual reopening of M&A in 2026. Private equity continues to deploy capital with conviction. After a three-year lull, PE reemerged as a dominant force with five consecutive quarters of platform acquisition growth.

Private equity experts predict add-on acquisitions will dominate in 2026 as buy-and-build strategies continue to outperform platform launches. Credit conditions are improving but underwriting stays tight, and earnouts plus RWI have become standard tools. If you're not using representation warranty insurance to strengthen your bids, you're at a disadvantage.

The Proprietary Deal Flow Advantage

When the market gets competitive, the traditional channels like brokers, auctions, and banker processes get flooded. Everyone sees the same deals. Same pricing. Same timelines.

Proprietary deal flow becomes a real advantage. If you can access opportunities before they hit the broker network, before 50 other buyers get the memo, you're making fundamentally different decisions. You're not competing on multiple, you're negotiating on one.

OutSearched focuses on this problem. We reach business owners directly, usually before they're engaged with sell-side advisors. That means lower multiples, cleaner processes, and more time to do proper due diligence. See: better deals.

The platform generates 52X more owner outreach than traditional methods. For independent sponsors and search funds competing against established firms with bigger teams, that coverage difference is everything.

Where PE Is Looking

Longshore Capital closed Fund II at $325 million, targeting lower middle market buyouts. Independent sponsors and family offices are competing more aggressively for founder-led businesses.

The PE firms having success right now? They're bringing operational expertise, top-line growth playbooks, and resources that help portfolio companies scale faster.

For sellers, that means more sophisticated buyers in the market. For buyers, it means you need to differentiate on more than capital.

The Bottom Line

2026 is setting up as a year where preparation meets opportunity. The data supports increased deal activity. Rates are moving favorable. PE has capital to deploy.

But the window for proprietary deal flow is shrinking as more buyers figure this out. The firms building systematic sourcing advantage now, before the competition intensifies, will be the ones closing deals at better economics through platforms like OutSearched.

The market rewards those who act before the crowd.

"Before you go to hunt, sharpen your knife." - Native American Proverb

Happy hunting,
- Nate

Sources: Bain & Company, Deloitte, EY, Capstone Partners, Dealroom, Longshore Capital, Chesapeake Corporate Advisors, BCG, PwC, Morgan Stanley, Lexology, Freshfields