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PowerComps Middle Market Update for Q1-2026

In the latest PowerComps report, it has been highlighted that the landscape of middle-market private deals is witnessing a shift towards quality over quantity. Over the past twelve months, from Q1-2025 to Q1-2026, there has been a notable increase in deal multiples across the range of deals valued between $10 million and $500 million. The median TEV (Total Enterprise Value) to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) multiples rose from 8.4x in 2024 to 9.2x by the end of March 2026.

This trend presents two primary observations. Firstly, smaller transactions are experiencing more modest gains compared to their larger counterparts. Secondly, while the pricing for deals shows resilience, the overall deal volume remains subdued across all size categories. This suggests that the upward pricing is occurring in a relatively constrained environment, with fewer transactions taking place.

Detailed Look at Median Multiples by Deal Size

The report outlines significant statistics regarding median TEV/EBITDA multiples categorized by deal size:

• - 1–10 million: Increased slightly from 5.4x in 2023 through 5.5x in 2024, stabilizing at 5.5x for Q1-2026.
• - 10–50 million: Grew from 6.4x to 7.1x, reaching 7.3x in the latest quarter.
• - 50–200 million: This category saw multiples rise from 8.8x to 8.4x, finally landing at 9.0x.
• - 200–500 million: Impressive growth from 10.6x in 2023 to 11.4x in Q1-2026, showcasing a robust trend for larger transactions.
• - Total Average: The overall median across all sizes improved from 7.1x to 7.5x, culminating at 7.7x.

Quality Impacts Multiples

An essential finding highlighted in the analysis pertains to the interaction between operating quality and valuation. Focusing specifically on lower middle-market manufacturing transactions within the 10MM to 50MM TEV range, the data exhibits that median manufacturing multiples rest at 6.7x TEV/EBITDA, with an average EBITDA margin of 18.7%. Interestingly, this dataset elucidates a clear correlation between operational quality and valuation.

• - Above-Median Cohort: Entities in this group displayed a multiple averaging 7.2x with margins of 23.9%.
• - Below-Median Cohort: In contrast, the counterparts represented by a 6.3x multiple maintained lower margins at 13.5%.

This substantial 10.4 percentage point margin differential strongly affirms that margin quality serves as a primary catalytic force in the expansion of multiples, even within a cautious transactional atmosphere.

The Reality of Deal Terms

The commentary from the marketplace resonates with the old adage, "the only certainty is that nothing is certain." Despite the prevailing uncertainties, dealmakers have increasingly turned to earnouts as a mechanism to address gaps in valuations and to mitigate risk. This practice, especially prominent in the smaller deal sizes, reflects a structural methodology within today's market—indicating a disciplined approach towards financial underwriting in the present climate of uncertainty.

In transactions valued between $10 million and $50 million, the average earnout has been recorded at 16.5% of TEV with a median duration of 24 months. Earnouts have emerged not merely as a strategy challenging alignment differences but rather as evidence of prudent risk management amidst limited visibility into future forecasts.

Industry Benchmarks and Insights

The comprehensive database provided by PowerComps features proprietary benchmarks segmented by NAICS (North American Industry Classification System) codes across various industry profiles and sizes. This finely detailed structure allows market participants to assess valuations with enhanced precision.
Some notable observations include:

• - Manufacturing at 10.0x for 50–200MM, compared to other sectors.
• - Construction and Distribution sectors show limited responsiveness to scale due to current cyclic trends, while distribution remains under pressure from ongoing tariff volatilities that impact both margins and valuations.

Conclusion

Overall, as private equity and middle-market professionals observe these trends, a significant understanding emerges from the data. The environment necessitates an emphasis on quality transactions, with professionals advising a discerning approach towards valuations. With continued engagement and access to platforms like PowerComps, participants can strategically navigate the complex landscape of the middle market, potentially positioning themselves for favorable opportunities amid the evolving landscape.