The middle-market M&A recovery is gathering momentum, but not every business is benefiting equally. BMO Sponsor Finance’s Q3 2026 Transaction Trends report points to strengthening pipelines and growing sponsor-backed sale activity, alongside persistent valuation gaps, longer timelines and intensive due diligence. What The Report Shows - More businesses are being readied for sale: The number of companies BMO’s advisory team was hired to sell hit a record in June 2026, about 25% higher than a year earlier. Deals closed so far this year are already about 50% above the total for 2025. - Private Equity Firms are now half the Sellers: About half of the new sale opportunities in 2026 came from businesses owned by private equity firms, up from roughly a third in 2024 andredactedThese firms have held companies longer than usual and need to return cash to their investors. Owners are also starting to prepare 6 to 12 months before they go to market. - Loans cost a little more: Interest on loans is SOFR, the benchmark rate US banks use for floating-rate loans, plus a margin set by the lender. That margin fell to about 4.75% early in 2026, but has since risen to about 5%. - Buyers pay more but borrow the same: Buyers paid about 14.5 times EBITDA in Q2 2026, while bank debt stayed around 4.5 times EBITDA. They paid the higher prices with more of their own money, not more borrowing. - Buyers are checking more: Buyers are spending more time on tariffs and supply chains. They also test whether a business can raise its prices when its own costs go up. For technology and service businesses, buyers now check whether AI could replace what the business sells. What It Means For Deals - More Buyers for smaller companies: Private equity firms are buying smaller businesses to add to companies they already own. A small business bought at a lower multiple is worth more once it becomes part of a larger company valued at a higher multiple. - Buyers bring more cash: When banks won’t lend more while prices rise, the buyer puts in more of its own money or asks the seller to finance part of the price.