Deal Origination Benchmark Report 2026

In 2025, we saw lower transaction activity in the lower middle market. This, in turn, has implications across the broader ecosystem, as smaller deals have historically served as a pipeline for larger funds that prefer to acquire “pre-improved” companies from other private equity firms that have already implemented operational and strategic enhancements. This is likely to further increase competition for quality middle market assets, a trend that has been intensifying for several years. Firms that successfully adapt are building relationships with companies before they come to market and proactively seeking new deal sources to secure inclusion on future buyers lists.

Exit activity also reflects the collective strain. Less than half of private equity firms included in the report exited a platform investment in 2025, underscoring elongated hold periods and continued uncertainty for investors demanding liquidity. The best-positioned managers are those with disciplined capital deployment strategies and robust value creation plans that focus on both margin expansion and exit planning.

In this context, the dispersion in market coverage and sourcing effectiveness across firms remains pronounced. As highlighted in this report, success is no longer defined by scale of coverage alone, but by how effectively firms align and adjust their sourcing strategies with sustained competitive pressures and macro uncertainty.