Dealmakers

Mid-market M&A in Australia

Australian M&A

A multi-year uptrend reached a new peak in 2025, but it’s the mid-market surge that reveals where smart money is heading.  

After two years of modest growth, Australian M&A hit its stride in 2025. Total cumulative deal value jumped 11% year on year to reach AU$143.7b, while volume climbed 8% with 1,132 transactions completed.  

This marked the strongest performance since the current uptrend began in 2023. The acceleration reflects improving business confidence, stabilising interest rates and pent-up demand from buyers.

Additionally, many dealmakers expedited deal timelines to get ahead of new merger reform laws which came into effect on 1 January 2026. 

More than half (58%) of respondents plan to increase M&A investments in Australia over the next 12 months, and another third (35%) say their activity will remain unchanged, signalling that sentiment is shifting from cautious optimism to genuine conviction.

Australia mid-market

Mid-market outperformance signals a strategic shift.   

In 2025, mid-market deal value surged 14%, reaching AU$20.9b, while volume rose 11% with 307 deals.

This result ends a negative trend that began in 2022 and points to a fundamental change in sentiment toward the middle market.

For 2026, 71% of dealmakers say they will increase investment in the mid-market, 18% foresee major commitments and 53% say at least moderate investments will be made. An additional 25% will keep their dealmaking unchanged from last year.

For active dealmakers, the message is clear: competition for quality mid-market assets will intensify, and those who move decisively will capture the best opportunities. 

Broad reform acceptance masks concerns about execution costs and timeframes. 

Almost 60% of respondents expect the merger reforms to ultimately increase dealmaking, while only 23% anticipate a decline. Another 18% see no material impact at all. 

The real concerns aren’t about uncertainty, they are about execution. More than half (55%) say increased costs are the biggest negative impact, while 43% point to longer deal timeframes.

Only 2% say increased uncertainty is a major problem, indicating the rules themselves are generally well understood, even if burdensome.

For dealmakers, this creates a straightforward calculus: deals will take longer and potentially cost more to complete, but the path forward is clear.  

Refinement to reforms needed but framework largely accepted. 

While most dealmakers accept the reforms, 65% believe the merger framework needs refinement: 18% call for major changes and 47% want at least minor adjustments. Only 33% think it’s working as intended. None support reverting to voluntary notification.

Dealmakers also want broader consideration of merger impacts across employment, consumer outcomes and small business visibility, recognition that ACCC reviews are increasingly extending beyond pure competition analysis into industrial policy territory.

Founder exits and divestitures will fuel a healthy pipeline of mid-market deals.  

Succession planning tops the list of deal drivers in both the mid-market (42%) and broader M&A landscape (32%), signalling a wave of founder-led exits and ownership transitions that will define deal flow for years to come.

Baby boomer business owners who delayed exits during the pandemic and due to rate volatility are now moving while buyer appetite is strong. For acquirers, this creates a target-rich environment of established, profitable businesses with proven management teams and loyal customer bases.  

Divestitures rank as another major driver, reflecting active portfolio management as corporates and private equity sponsors rationalise holdings and sharpen strategic focus.

These are deliberate decisions to exit non-core assets, unlock capital and redeploy into higher-return opportunities.   

Debt availability further confirms the healthy tone, transactions are being enabled by access to financing, indicating lenders are comfortable backing quality deals at reasonable leverage levels.

The risk landscape for Australian mid-market M&A has shifted markedly in the past 12 months. 

Regulatory change (45%) and global trade tariff volatility (40%) have emerged as dominant concerns in 2026. Concerns around delays in government approvals for foreign investment more than doubled, rising from 15% in 2025 to 32% in 2026.

This spike aligns with findings that merger reforms are adding time and cost to transactions, but the foreign investment approval bottleneck appears even more acute.

For cross-border buyers, dual track regulatory processes may create compounding delays that can stretch deal timelines by months. Global trade tariff volatility adds a further layer of complexity, particularly for deals involving supply chain-dependent businesses or cross-border operations exposed to shifting trade relationships.

Meanwhile, concerns about equity market volatility and access to capital have dropped sharply as dealmakers adjust to the higher-rate environment and debt markets stabilise.

Pricing tension eases as buyers and sellers find common ground. 

Valuation remains the most common deal-breaker in Australian mid-market M&A – but the nature of the disagreement is shifting. The share of abandoned deals due to valuation expectation gaps fell from 32% in 2025 to 24% in 2026, suggesting buyers and sellers are finding it easier to reach agreement than in previous years.

Most respondents (63%) believe vendor valuation expectations are realistic, with 20% calling them highly realistic. That leaves roughly one-third who still view expectations as unrealistic to some extent, a meaningful minority, but far from the frustration that characterised earlier periods of market dislocation.

That price gaps are narrowing but not disappearing signals buyers will stretch for the right asset, but they’re still walking away from overpriced targets.

For sellers, realistic pricing gets the deal done; testing the market with inflated expectations costs time and credibility.

The in-demand sectors 

After years of TMT dominating mid-market deal flow, 2025 brought a decisive shift with mining leading the charge. 

But as dealmakers look ahead to 2026, TMT is reclaiming its place at the top.  TMT is the sector most expected to drive mid-market M&A in 2026, with a unanimous 100% of respondents pointing to it as the top growth area. Industrials and chemicals (98%) and energy, mining and utilities (98%) follow closely behind. Leisure (62%) and real estate (58%) round out the top five.  

Top 5 sectors for 2025:

1. Energy, mining and utilities
2. Technology, media and telecommunications
3. Pharma, medical and biotech
4. Business services
5. Industrials and chemicals 

The distressed sectors. 

Defence and government stand out starkly – both attract 0% expectations for increasing mid-market M&A, yet 100% of respondents flag them as areas of potential distressed activity.

Pharmaceuticals, medical and biotech (94% distressed vs 6% growth), agriculture (88% distressed vs 13% growth), and transportation (87% distressed vs 13% growth) show a yawning gap between low deal appetite and high distress expectations.