Highlights from the report:
- Lower Middle Market deal count rose 5% QoQ to 3,523, but overall deal value fell 39% YoY, driven by fewer mega-deals and smaller average check sizes.
- The market is bifurcating on AI: infrastructure-facing sectors like Industrials are compounding on demand, while software is being repriced, with sector deal value falling to $10B in Q2.
- We highlight investment trends across our three industry practice teams:
- Industrials: AI infrastructure, grid modernization, and defense/resilience spending are converging on a narrow supply base, pushing deal sizes higher despite fewer deals.
- IT Services: Enterprise AI adoption, cloud/data modernization, and security-led managed services consolidation are keeping M&A activity healthy.
- Human Capital Management: A more constructive backdrop is emerging, with improving seller fundamentals and structural demand in healthcare, industrial, and education segments.
- With $1.0T in PE dry powder and improving buy-side sentiment, our team expects for more closings in H2 2026 and continued opportunity building into 2027.
DISCLAIMER This presentation is intended for information and discussion purposes only and does not constitute legal or professional investment advice. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of Harbor View Advisors, LLC (“HVA”). The information in this presentation was compiled from sources believed to be reliable for informational purposes only. HVA does not endorse or approve, and assumes no responsibility for the content, accuracy or completeness of the information presented.
