Manufacturing Update: September 2026

Overview

Manufacturing M&A continues to be defined by selectivity. Deal volume remains relatively flat, but deal value continues to rise. Buyers remain interested in the industry and are choosing an intentional approach to acquisitions, focusing on fewer, larger transactions.

Strategic acquirers continue to dominate at scale, while financial buyers remain active but more selective. A record backlog of sponsor-owned and privately held companies will drive sell-side activity through 2027. 

Key Takeaways

• Demand has bifurcated rather than softened uniformly. Manufacturers focused on power, grid, defense, and AI build-out continue to command premiums on multi-year backlogs, while consumer-exposed suppliers face softening orders.
• Buyers are shifting diligence focus to tariffs and margin durability. Trade policy remains pivotal to the industry, and buyers are favoring companies with diversified sourcing and a meaningful U.S. manufacturing footprint.
• Recurring work and specialized features drive premium valuations. Buyers are placing increased value on manufacturers whose products include recurring service and maintenance revenue, including installation, repair, and aftermarket work. Additionally, companies with specialized certifications and excess capacity command higher valuations. 
• Lower middle-market valuations have remained consistent through a tougher financing environment, driven by buyer demand. The size premium buyers are willing to pay for scaled assets remains wide.