DC Advisory's US Private Equity Mid-Market Monitor: Q2 & Q3 2026

Where the market stands

• Mid-market deal value rose year-over-year in Q2 2026, even as broader deal volume held at multi-year lows
• The Federal Reserve's September rate increase, its first in more than three years, added modestly to financing costs without triggering the scale of repricing seen in the last hiking cycle
• Median holding periods now stand at approximately six years, well above the traditional three-to-five-year range, with continuation vehicles extending some holds further
• A structural divide is widening between the largest sponsors, increasingly reliant on management fees, and true middle-market managers focused on realized returns
• Water, wastewater, environmental services, and blue-collar technical services remain the sectors attracting the strongest sponsor interest

US Private Equity deal activity by quarter, Q1 2024–Q3 2026

US private equity deal activity has held broadly steady since 2024, ranging between roughly 3,362 and 4,560 deals per quarter. Volumes reached 4,114 in Q2 2025 and 4,560 in Q3 2025, before easing to 3,641 in Q1 2026 and recovering to 3,982 in Q2 2026 and dropping slightly to 3,527 in Q3 2026 - consistent with the mid-market's year-over-year deal value growth referenced above. 

Source: PitchBook Data, Inc. www.pitchbook.com, *from 01/01/2024 to 10/01/2026, quarterly M&A volumes. The cited data has not been reviewed by PitchBook analysts and may be inconsistent with PitchBook methodology.

What this means for sectors

Buyer conviction and value creation opportunities vary sharply by sector:

• Aerospace, Defense & Government Services: Buyers are concentrating capital around mission-critical capabilities in AI, autonomy, cyber, space, and unmanned systems, with cross-border deal flow accelerating on both sides of the Atlantic
• Beauty, Health & Wellness: Skincare remains the most active subsector, with science-backed brands and proprietary technology commanding the strongest premiums as Asian strategics add competitive tension to processes
• Education & EdTech: Measurable ROI and AI resilience are defining the next cycle of winners, with professional training, early childhood, and higher education workforce programs drawing sustained interest
• GP Strategic Advisory: GP stakes and non-dilutive financing are becoming central to platform sustainability, as managers move beyond the next fundraise toward durable, institutional structures.
• Industrials: Data center-adjacent services, grid investment, and reshoring are keeping the sector firmly in play, even as rising commodity costs and cybersecurity scrutiny sharpen buyer diligence
• Chemicals & Materials: Technical differentiation is becoming the clearest route to buyer conviction, with specialty assets in water treatment, electronics materials, and performance formulations drawing the strongest demand
• Healthcare: Consolidation of the consolidators is accelerating across dental, dermatology, and ophthalmology, as strategic buyers and sponsors compete for scaled provider platforms
• Infrastructure: A fifth pillar of asset-light, data- and network-driven businesses is being priced as infrastructure, expanding opportunity beyond traditional hard assets
• Private Capital Markets: Discipline has replaced velocity as the defining feature of private credit, with sponsors underwriting to a higher-for-longer, credit-differentiated environment
• Information Services: Proprietary data remains the crown jewel of the sector, even as AI-driven disruption extends hold periods and reshapes business models
• Technology: The AI premium is becoming harder to earn, with buyers demanding proof of measurable productivity gains rather than promise alone

What this means for sponsors

In our view, sponsors who prepare now, rather than wait for conditions to turn, will be best placed as momentum builds through 2027. Buyer conviction is concentrating around specific sectors and asset types, the Federal Reserve's rate path is set to shape valuations and financing conditions, and the routes to value creation are narrowing to those who position early. Sponsors, founders, and lenders who act on this view now will be best placed to capture full value as the market settles into its next phase.

Read the full report

Predicting future activity is an art and not a science and this analysis is not scientific. It is informed judgement – much like the best M&A advice.

This publication has been prepared solely for information purposes and is not intended to function as a “research report.” In particular, this means that it is not intended, nor does it contain sufficient information, to make a recommendation as to the advisability of investment in, or the value of, any security.

Additionally, this publication does not constitute or form part of, and should not be construed as, an offer to sell, or a solicitation of any offer to buy, or any recommendation with respect to, any securities. You should not base any investment decision on this publication; any investment involves risks, including the risk of loss, and you should not invest without speaking to a financial advisor.

For additional important information regarding this publication, please see our Insights & Publications disclaimer > 

What to read next

publication

DC Advisory's US Private Equity Mid-Market Monitor: Q1 2026 & Outlook

May 11, 2026

Deal Announcement

DC Advisory advises EFI and its shareholder Siris Capital Group, LLC on its combination with Agfa’s Digital Printing Solutions business

September 28, 2026