At Carter Morse & Goodrich, we are launching a new quarterly update to share our perspective on the state of the M&A market, what we are seeing within our firm, and what it means for families and founders considering a once-in-a-lifetime transaction.
A Strong but Uneven M&A Market
The first quarter of 2026 continues a trend we have been seeing for some time: a good, but not great, M&A market.
On the surface, 2025 was one of the strongest years on record. However, when you look more closely, activity has been driven by two extremes: large, mega deals driving overall dollar volume, and smaller tuck-in acquisitions driving transaction volume.
This has created what we describe as a “barbell market.”
For middle-market companies – where we focus – this is actually encouraging. The middle remains consistent, with a solid base of transaction activity and continued demand from both private equity and strategic buyers.
Industry Trends: Stability in the “Old Economy”
We are seeing significant activity in sectors like technology, healthcare, and AI-driven businesses. These areas continue to command premium valuations.
At the same time, many “old economy” sectors – manufacturing, distribution, consumer products, HVAC – remain highly stable and resilient. These businesses are less volatile and continue to attract strong buyer interest.
While AI is reshaping many industries, it is far more difficult to replace companies that are physically producing goods. That said, AI is quickly becoming a critical value driver across all sectors.
AI Is No Longer Optional
Whether you are in a traditional industry or a high-growth sector, buyers are increasingly focused on how companies are leveraging AI.
From automating order entry and data processing to enhancing customer service and operational efficiency, AI is now a key part of the value equation.
If you have not yet explored how AI can impact your business, now is the time. Buyers are actively evaluating these opportunities and factoring them into valuation and post-transaction strategy.
Preparation Drives Value
One of the most consistent themes we are seeing in today’s market is this: well-prepared companies significantly outperform expectations.
We are currently working with several businesses that demonstrate this clearly. A New England-based company that attempted to go to market previously is now achieving a valuation 50 to 60 percent higher due to improved preparation and positioning. A Midwest company generated over 20 indications of interest, resulting in a highly competitive process with multiple aggressive bidders. A New York-based consumer business is exceeding expectations due to strong demand and limited supply of high-quality companies.
The takeaway is simple: preparation is one of the most powerful drivers of value in today’s market.
The “Silver Tsunami” Is Coming
We continue to see momentum building from what has been referred to as the “silver tsunami” – a wave of business owners approaching transition without a next generation ready to take over.
As more of these businesses come to market, supply will increase. At the same time, buyer demand – particularly from private equity – remains strong and consistent.
This creates an important question for owners: when is the right time to sell?
It’s Not Just a Business Decision
While market conditions and valuation are important, we are increasingly finding that timing is less about the business and more about the individual.
Owners should be asking: is this the right time for me and my family, what does the next chapter look like, and what does success mean beyond just price?
There will always be a reason to wait for the next inflection point. Taking a step back and evaluating the decision holistically is critical.
Three Key Recommendations
For those considering a transaction, we consistently emphasize three priorities.
- Build the right advisory team. Surround yourself with experienced professionals who can guide you through the process and help you make informed decisions.
- Plan for what comes next. Think beyond the transaction and consider the future for your management team, your customers, and your personal goals.
- Prepare early and thoroughly. Ensure your business is ready for scrutiny, including quality of earnings, legal and environmental diligence, and overall operational readiness.
Preparation is not optional. It is essential to achieving the best possible outcome.
Final Thoughts
The M&A market remains active and resilient, particularly in the middle market. Well-positioned companies continue to attract strong interest and premium valuations.
The most important question, however, is not just whether the market is ready – but whether you are.
If you are considering a transition or simply exploring your options, we would welcome the opportunity to have a conversation.
Connect with us to start a conversation about your next chapter and how to maximize the outcome.