2026 RiverStone Reporting M&A Market Outlook

While it has taken a couple of years to work through the impacts of the pandemic, it seems as though the M&A market has finally turned the corner. Valuation expectations have normalized and odd one-time EBITDA adjustments have run off of a company's historical three-year financial summary, allowing for investors to return to being acquisitive with confidence. After a muted 2022-2024 M&A market, 2025 showed a rebound in transaction volume and aggregate deal value, and dry powder remains near all-time highs. In our 2026 M&A Market Outlook Report, RiverStone analyzes the latest trends in private equity including deal activity, valuations, fundraising, and the challenged exit environment, resulting in increased hold periods and aging assets.

RiverStone also analyzes several ongoing themes that we have witnessed across the lower middle market over the past 24 months. Family offices are becoming increasingly active, some directly into small businesses, while others continue to commit to institutional managers as a limited partner due to constrained resources. Many investors have struggled with assets acquired during 2020-21, impacted by frothy valuations, excessive access to debt, and cheap capital, which has led to challenged assets due to rising interest rates and expensive valuations (which have since come down). Private equity firms are holding on to assets longer given the difficult exit environment, which has led to an influx of sponsors utilizing continuation vehicles (CVs) to drive liquidity for LP's. Venture and growth equity firms have continued to be quiet after so much capital was put to work during the pandemic at record, unsustainable valuations. Cash is king as investors shift their focus back to cash-flow generative assets and self-sustaining businesses with stronger margins, competitive moats, and minimal cash burn. The fundraising market remains heavily challenged as institutional LP's require liquidity and DPI prior to re-investing in a manager's latest fund. The independent sponsor and search fund world has become over-crowded and there remains a bifurcation of manager quality and ability to raise capital to close deals. And finally, there has been a wave of investments in home care services including residential HVAC, landscaping, and roofing - it is unlikely all of these buy-and-builds succeed due to growing competition, the localized nature of the service (reducing synergy potential), and rising valuations for add-ons.

RiverStone brings valuable middle market investment banking and private equity experience and continues to assist a variety of clients including private equity firms, independent sponsors, search funds, growth equity firms, investment banks, hedge funds, and family offices work through diligence more efficiently. Key services include building institutional investor presentations & CIMs, detailed LBO models, 13-week cash flow analysis, KPI analytics, developing PPM's / DDQ's, enhancing data room materials, updating messy internal databases / portfolio monitoring, sourcing new platforms (especially healthcare-focused), and being a thought partner around growth and value-creation.

If your junior team is capacity-constrained, incapable, or if you were tricked into onboarding a cheap AI solution which your team has yet to log into, reach out to our RiverStone team today. We have excellent client testimonials and a laundry list of blue-chip references as we've grown into a premier outsourced private equity resource at a fraction of the cost of a full-time hire. We create long-term alignment with clients by reducing dead deal costs (success-based compensation) and working for sweat equity, often continuing to help portfolio companies with financial reporting, board packages, and KPI's post-closing.

We look forward to continuing to help our clients work through diligence, close transactions, and accelerate growth in 2026! Download our free M&A Market Outlook report to gain insights into recent trends and projections for the private equity landscape in 2026.