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Alternative Market Briefing

Middle market private equity firms cautiously optimistic on M&A

Thursday, June 26, 2025

Bailey McCann, Opalesque New York:

Middle market private equity firms are more upbeat about M&A in the second half of the year, according to a recent survey from Churchill Asset Management. GPs expect the base case to match last year's deal activity with the potential to beat it if transaction volume increases, survey results show.

The survey polled 164 senior leaders from Churchill's middle market PE relationships to gauge sentiment in today's market environment and how its influencing investment decisions.

"What we're seeing in today's environment is a flight to quality - deals for well performing assets in non-cyclical sectors like business and financial services are still getting completed," said Randy Schwimmer, Vice Chairman, Investor Solutions of Churchill. "Just as important, the power of relationships has never been more apparent."

Over half of private equity sponsor respondents anticipate normalized M&A activity in the first half of 2026, while a quarter expect normalization as early as the second half of 2025. In line with this outlook, when asked how many exits they anticipate over the next 12 months, 42% of respondents noted two, with over one third (34%) eyeing three or more. Expectations for returns are similarly strong, with more than 90% projecting 2025 base-case returns to match or exceed those in 2024.

Most PE leaders plan to maintain current investment strategies amid the current investment environment, while 33% will ......................

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