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Bailey McCann, Opalesque New York:

The middle market is emerging as a bright spot for M&A activity and in turn the private equity funds focused on this market. Middle-market deal activity managed to defy the broader market deceleration, posting sequential growth in value and volume at $97.2 billion in Q2-a 4.9% gain quarter on quarter and an 18.1% rise year on year according to data from PitchBook.

Extrapolating these figures, the year is on track for $383 billion in total deal value and 3,829 transactions, an 11.8% increase year on year. If that holds, 2025 could be the best year for middle market M&A since 2021.

"The persistence of activity in the face of volatility suggests that GPs are treating policy uncertainty and trade realignment as passing storms, charting their course with confidence that calmer waters and steadier policy winds will set the stage for renewed economic expansion in the years ahead," PitchBook analysts write.

Despite these greenshoots, exit activity remains relatively low. he second quarter produced 211 exits totaling $28.4 billion, a 5.3% drop in value and a 7% decline in count from the first quarter, PitchBook data shows. Smaller companies, less reliant on global exposure, remain attractive to strategic buyers seeking bolt-ons and niche capabilities.

The relative slowness of exits is also having an impact on fundraising. Through the first half of the year, 59 middle-market funds closed with $41.6 billion in aggregate commitments......................

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