Midyear 2026 Valuations: The Gap Between the Average Multiple and Yours

The midyear valuation data is in, and the headline number looks reassuring. PitchBook's second quarter global M&A report shows the median enterprise value to EBITDA multiple holding at 10.2x on a trailing twelve month basis, essentially unchanged despite a choppy first half. For a business owner skimming the coverage, that reads like stability. Look one layer deeper, though, and the defining story of 2026 is not the average multiple. It is the widening spread around it, and where your company sits in that spread matters far more than where the median does.

The Average Held. The Range Did Not.

Global deal value reached an estimated 1.3 trillion dollars in the second quarter, up 35 percent from a year earlier but down 18 percent from the first quarter's record pace. Underneath that total, pricing varied sharply by sector. Healthcare transactions commanded a median of 12.6 times EBITDA. Energy deals priced closer to 8 times. Buyout multiples held near 11.9 times at the larger end of the market, while middle market private equity deals continued to clear in the 7.2 to 7.5 times range, roughly flat against 2025.

That is a spread of more than four turns of EBITDA between the premium sectors and the value sectors, before accounting for anything specific to the company. A turn of EBITDA is simply one multiple of a company's earnings: for a business generating 5 million dollars in EBITDA, each turn represents 5 million dollars of enterprise value. Four turns of dispersion means identical earnings can support valuations 20 million dollars apart depending on sector, quality, and positioning.

Software offers the sharpest illustration. The median publicly traded SaaS company traded at 3.3 times trailing revenue as of March 31, down from levels more than twice that in recent years, after roughly 1 trillion dollars in aggregate market value came out of the sector in the first quarter. Private software companies are not immune to that repricing; buyers mark their models to the public comparables, and the adjustment flows downstream into private deal negotiations within a quarter or two.

What Is Driving the Spread

Three forces explain most of the dispersion. The first is buyer selectivity. First half data across several trackers shows deal volume stagnant even as total value rose, with the largest transactions accounting for roughly 64 percent of US deal value. Buyers are concentrating capital in fewer, higher-conviction deals. When buyers are selective, they pay up for the businesses that fit the thesis and step back from the ones that do not, stretching the distribution in both directions.

The second is the cost of capital. Financing conditions tightened again this year, and 53 percent of dealmakers surveyed in June said getting financing is harder in 2026 than it was in 2025. When debt is expensive, every point of business risk gets priced. A company with volatile earnings needs a lower entry price for the same deal math to work, while a company with dependable cash flow can still support a full valuation.

The third is the quality premium. Market observers across the middle market are describing 2026 as the year of differentiation: businesses with recurring revenue, a management team that runs the company without the owner, and EBITDA above 2 million dollars are holding their multiples firm. Owner-dependent businesses, or those with heavy customer concentration, are facing longer processes, deeper diligence, and more structured offers. Buyers are paying for proven durability rather than potential.

Size Still Sets the Baseline

Before quality factors move a valuation up or down, company size establishes the starting range, and the midyear data shows how steep that ladder remains. Businesses valued below 2 million dollars typically trade near 2.9 times seller's discretionary earnings, a measure that adds the owner's compensation back to profit. Deals in the 2 million to 5 million dollar range cleared at a median of 4.8 times EBITDA in recent data. Companies changing hands between 25 million and 50 million dollars command 7 to 8.5 times, and large buyout targets price well above that.

The ladder exists for structural reasons. Larger companies attract more buyer competition, including private equity funds that cannot look below a size threshold. They support more debt on better terms. And buyers perceive them as less risky because they tend to have deeper management, broader customer bases, and more resilient systems. For owners, the practical implication is that growth near a size threshold has outsized value: moving from 4 million to 6 million dollars of EBITDA often re-rates the whole company onto a higher rung, not just the incremental earnings.

Moving Up Within Your Range

Owners cannot control the median multiple, the interest rate environment, or sector sentiment. The spread, however, is partly within their control, because much of it reflects factors that diligence can verify. Preparation shows up directly in price. Sellers who commissioned their own quality of earnings analysis, a review that stress-tests reported profits to separate sustainable earnings from one-time gains, achieved an average of 7.4 times enterprise value to EBITDA against 7.0 times for those who did not. Deals also commonly reprice 5 to 15 percent after diligence findings, which means unexamined numbers carry a real cost.

What the Second Half Looks Like

Sentiment for the back half of the year is constructive. Sixty percent of dealmakers surveyed in late June expect activity to increase over the next six months, and limited partners report that private equity managers are actively preparing portfolio companies for exits, including public listings. More activity generally helps sellers.

What is unlikely to change is the dispersion itself. Selectivity, expensive financing, and the premium on verifiable quality are structural features of this cycle, not quarterly noise. Owners planning a transaction in the next one to three years should assume the market will keep sorting businesses into a wide range around the average, and should focus on the factors that determine which side of that range they occupy.