U.S. M&A Accelerates as Buyers Raise the Bar

U.S. dealmaking has accelerated sharply in 2026, with strategic buyers pursuing scale, differentiated capabilities, and exposure to some of the economy’s fastest-growing sectors. But stronger activity is unfolding alongside a renewed increase in interest rates, creating a market where conviction and execution matter as much as access to capital. Evan Berta, an associate at Hunt Scanlon Ventures, examines EY-Parthenon’s latest Merger Monthly findings and what the surge in deal activity means for private equity, corporate buyers, and the leadership and talent required to deliver post-close value.

EY-Parthenon’s September Merger Monthly points to continued momentum across the U.S. M&A market. Through August, deal value for transactions above $100 million reached approximately $2.2 trillion, up roughly 48 percent year-over-year, while volume increased 23 percent. Momentum remained strong from June through August, with deal value rising 23 percent and volume advancing 22 percent from the comparable period last year.

The middle market has been an important part of that expansion. Transactions between $100 million and $1 billion-plus recorded 26 percent year-over-year growth in value during the June-to-August period, supported by financing capacity and stronger buyer conviction despite geopolitical uncertainty. EY says strategic acquisitions targeting scale, market leadership, and attractive growth segments continue to underpin activity.

The financing backdrop, however, has just become more demanding. On September 16, the Federal Reserve raised its target rate by 25 basis points to 3.75 percent to 4 percent, citing elevated inflation even as economic activity and capital investment remain solid.

Strategic Buyers Keep Moving

Corporate buyers remain an important force behind the current M&A cycle. EY’s data points to mega deals and strategic acquisitions designed to strengthen competitive positions, expand market reach, consolidate platforms, and acquire differentiated capabilities.

Technology leads the market with approximately $685 billion in year-to-date deal value, up 57 percent, while transaction volume has increased 24 percent. Life sciences deal value has climbed 118 percent to approximately $312 billion, with volume rising 65 percent. Power and utilities has accelerated even faster by value, increasing 124 percent to nearly $240 billion as AI-related power demand and grid resilience attract investment.

“When companies acquire capabilities rather than simply scale, the people behind those capabilities become inseparable from the investment thesis.”

Those sector trends also tell a human capital story. AI, cybersecurity, specialized healthcare capabilities, energy infrastructure, and digital platforms derive much of their value from specialized expertise and leadership teams capable of continuing innovation after ownership changes.

“When companies acquire capabilities rather than simply scale, the people behind those competencies become inseparable from the investment thesis,” said Evan Berta, an associate at Hunt Scanlon Ventures. “Understanding which leaders, technical specialists, and operating teams are essential to future performance needs to happen before the deal closes, not after.”

That is particularly relevant as buyers pursue businesses in sectors where specialized talent is scarce. Retention, leadership assessment, succession, and organizational design can determine whether the capability that justified a premium valuation remains intact after the transaction.

Higher Rates Raise the Bar

The Federal Reserve’s latest move introduces another variable into an otherwise accelerating market. Mitch Berlin, EY-Parthenon Americas Vice Chair, said the rate increase reinforces the importance of capital costs without fundamentally changing why companies pursue M&A.

“Companies still need to grow, gain scale and transform their businesses, and those priorities remain in place even as financing becomes more expensive,” Mr. Berlin said.

The implications are likely to differ between buyer groups. Mr. Berlin noted that higher rates create additional pressure for leveraged buyers, particularly private equity, increasing the importance of valuation and financing discipline. Strategic buyers with strong balance sheets have greater flexibility to continue pursuing opportunities.

That distinction could make post-close execution even more consequential for private equity. When leverage becomes more expensive and underwriting assumptions tighten, there is less room for leadership gaps or organizational problems to derail a value creation plan.

“Higher financing costs increase the premium on execution,” said Mr. Berta. “When buyers have less room in the capital structure, they need greater confidence that the management team can deliver the operational improvements and growth assumptions being underwritten.”

The Middle Market Gains Momentum

The acceleration in middle-market M&A is particularly notable for the human capital sector. Many executive search, recruiting, staffing, leadership advisory, and talent technology businesses operate in a fragmented middle market where consolidation has created opportunities for both financial sponsors and strategic acquirers.

The broader conditions highlighted by EY, greater buyer conviction, demand for category-leading assets, and strategic interest in differentiated capabilities—closely resemble what is occurring across human capital M&A. Buyers are increasingly interested not simply in adding revenue, but in acquiring sector expertise, technology, recurring client relationships, specialized talent, and advisory capabilities that can expand an existing platform.

That creates opportunity, but also greater differentiation between assets. Businesses with strong leadership teams, defensible market positions, durable client relationships, and demonstrable growth are likely to command greater attention as buyers become more selective.

“The middle market is active, but buyers are becoming increasingly precise about what they are willing to pay for,” said Mr. Berta. “In human capital, the strongest assets are often those where leadership, client relationships, specialized expertise, and scalable infrastructure work together to create something that is difficult to replicate.”

Talent Moves Further Into Diligence

EY expects demand for high-quality, category-leading assets to continue supporting M&A, although further acceleration will depend partly on banks deploying excess capital and buyers gaining greater confidence in the durability of growth.

“The bar for deals may be higher, but the appetite for transactions that can create meaningful strategic value remains strong.”

That combination of stronger activity and higher financing costs could make diligence more important through the remainder of the year. Financial performance will remain central, but buyers increasingly need to understand whether the organization behind those numbers can sustain them.

For human capital advisors, that pushes talent considerations further upstream. Leadership assessment, retention planning, succession, compensation, and organizational capability are increasingly relevant before a transaction is completed, particularly when the value thesis depends on specialized people or intellectual capital.

What Comes Next for Dealmaking

Mr. Berlin summarized the broader environment succinctly: “The bar for deals may be higher, but the appetite for transactions that can create meaningful strategic value remains strong.”

EY’s latest numbers suggest that appetite is already translating into substantial activity. The next phase of the market may be defined less by whether buyers are willing to transact and more by which assets can withstand a higher threshold for investment.

For the human capital sector, that distinction matters. As capital becomes more disciplined, businesses able to demonstrate differentiated capabilities, durable relationships, strong leadership, and a clear path to growth could increasingly separate themselves from the rest of the market.