As we move further into 2026, dealmakers are navigating a market defined by momentum—but also meaningful restraint. Global transaction values have generally rebounded over the past year, driven in part by larger transactions, even as overall deal volume has remained selective and uneven. Research suggests the market is not simply “back.” It is evolving—shaped by uneven buyer conviction, tighter underwriting, and persistent policy and trade uncertainty.

What’s Keeping Dealmaking Cautious

The principal challenge in today’s market is not opportunity, it is durability. Inflation has moderated and financing markets are functioning more predictably than they were at peak volatility. At the same time, tariffs have introduced a unique form of uncertainty: announced one day, revised the next, and difficult to model with precision. In a business and tax environment, uncertainty is often what stalls M&A activity.

That uncertainty is influencing how deals are structured and underwritten. While valuations have generally rebounded rather than surged, they have also remained relatively stable in many sectors. Volume, however, has been more sensitive to external shocks, including tariff concerns that materially slowed activity earlier in the cycle. The result is a market where sellers are frequently motivated—whether due to succession planning, liquidity needs, or extended hold periods—but buyers are more selective and measured.

A Market Divided: The Flight to Quality

We are seeing a real flight to quality. The companies that are performing well and can show consistent earnings and a diversified customer base are still drawing interest. Buyers are willing to lean in for businesses they believe will hold up, even if that means paying a bit more.

The gap shows up on the other end of the market. Companies that feel marginal or harder to underwrite are getting more pushback. There are simply fewer bidders willing to take on operational or integration risk right now, which has created a noticeable divide between assets that run competitive processes and those that struggle to gain traction.

You can see it across sectors. Business services and technology-enabled companies continue to get attention, particularly where there is infrastructure or recurring revenue exposure. More discretionary areas, including apparel and other consumer categories, are facing tougher conversations as buyers take a closer look at spending trends and margin stability.

Diligence Has Shifted—And Deepened

Due diligence looks different than it did a few years ago. At one point, most of the focus was on supply chain access and labor availability. Those issues have not disappeared, but the analysis has broadened. Buyers are asking tougher questions about durability: how exposed the business is if tariffs shift, what happens to margins if policy changes increase input costs mid-hold, and whether revenue concentration creates vulnerability if demand softens. Those considerations are being built into models earlier, with more scenario testing before a deal moves forward.

Financing is still available, but it is not as flexible as it once was. Debt is more expensive, lenders are scrutinizing projections more closely, and leverage is harder to stretch. That has led to greater use of structured solutions such as earnouts, seller notes, and rollover equity, allowing risk to be shared more thoughtfully between buyer and seller. In this environment, how a transaction is structured can matter just as much as the asset itself.

Integration Starts Earlier

Due diligence looks different than it did even a few years ago. Not long ago, the focus was on whether a company could get product through the supply chain or find enough labor to keep up with demand. Those questions still matter, but they are no longer the only ones on the table.

Now the harder discussion is around durability. Can margins hold if tariffs change? What happens if a policy shift increases input costs mid-hold? How exposed is the business to a handful of customers if demand softens? Buyers are building those scenarios into their models and spending more time pressure-testing assumptions before they commit.

At the same time, financing is available, just not as forgiving. Debt costs more, lenders are asking tougher questions, and leverage is harder to stretch. That reality is pushing more deals toward structured solutions such as earnouts, seller notes, or rollover equity, all designed to share risk more thoughtfully between buyer and seller.

In this environment, how a deal is put together can matter just as much as the asset itself.

What This Means for 2026

There is an opportunity for a solid year ahead, but it will not lift every company equally. Deal values have proven more resilient than overall volume, and transactions are moving forward. At the same time, buyers are choosing their spots carefully. Sellers are entering the market, but expectations are settling into what today’s financing costs and risk profile will actually support.

Companies that come to market well prepared are still drawing interest. Clean financial reporting, a credible growth story, and a realistic understanding of value go a long way. When those pieces are in place, processes tend to move. When they are not, momentum can stall quickly.

More than anything, this is a market that rewards discipline. The deals that close and perform tend to be the ones where both sides have worked through integration, risk allocation, and post-closing priorities early on. Price still matters, but it is rarely the only factor that determines success.

Andrew M. Apfelberg

2019 ACG Los Angeles Business Conference

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