Private M&A Deal Trends To Watch: Key Takeaways From SRS Acquiom’s 2026 Study

Overview and Key Takeaways

What are the key private M&A deal trends to watch in 2026 and going forward?

SRS Acquiom has released its 2026 private-target M&A deal terms study. The Study analyzes deal trends across more than 2,300 transactions that closed from 2020 through 2025 and with a focus on the last four years.

While most of the Study’s sample involved U.S. public and private buyers, the Study’s insights remain valuable guidance for Canadian and cross-border dealmakers.¹ Our key takeaways include:

• 2025 was a somewhat unusual year for M&A. While deal volumes and values rebounded from the sluggish activity of 2023 and much of 2024, this occurred against a backdrop of increased policy and geopolitical uncertainty and volatility.
• Numerous deal terms indicate that, while buyers were returning to the table, many remained cautious about valuations and the possibility of post-closing disputes. Examples include a marked uptick in the size of escrows, fewer “walk-away” deals, and a rebound in earnout use.
• A significant year-over-year drop occurred in the regularity of sellers giving representations and warranties regarding cybersecurity. This may reflect concerns arising from rapid developments in artificial intelligence technology as may impact cybersecurity issues, risks and/or exposure.
• The impact of representation and warranty insurance (RWI) on all areas of private M&A, and particularly regarding indemnification, continues to be profound.

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Deal Size

The Study confirms what M&A market watchers know well: that the last two years saw a marked increase in mega-size deals. 10% of deals in 2024 featured values greater than US$750 million and in 2025 9% of deals exceeded this mark. By contrast, only 5% of deals in 2022 and 3% of deals in 2023 exceeded this mark.

Deal Structure

The percentage of deals featuring a U.S. public buyer dropped to its lowest percentage (32%) in four years. This decline in market share was lost to U.S. private companies (either PE backed (23%) or non-PE backed (16%)). The market share of PE buyers has remained remarkably consistent over the last four years at approximately 14%.

Transaction values as multiples of equity capital invested had strong gains in 2025. Average return grew to 6.5x in 2025 from 5.6x in 2024 and median return grew to 3.3x in 2025 from 2.5x in 2024. That said, these figures remained well below the heights seen in 2021 and 2022 (e.g., in 2021 average return was 8.4x and median return was 5.1x).

All cash deals had particularly strong showings in each of 2023 (59% of deals) and 2024 (58% of deals). 2025 included an abrupt reversal on this front, with all cash deals falling to 51%, the lowest in four years. This drop was taken up by corresponding increases in cash and management rollover deals (up 3% to 21%) and cash and stock deals (up 3% to 20%).

2025 marks the second straight year of a decrease in the frequency of management carveouts.² 2023 included a 70% year-over-year increase in deals featuring management carve-outs (from 3.6% in 2022 to 6.0% in 2023). However, this dropped to 5.0% in 2024 and 4.3% in 2025. The Study also reflects a clear correlation between the frequency of management carve-outs and transaction value, with the likelihood of a carveout dropping steadily as transaction value grows (from 7.6% of deals valued at $50 million or less to only 1.3% of deals valued at $100 million or more).

Investment Exit Timing

2022 through 2024 showed a slow but steady increase in both median exit timing (from 6.5 to 6.7 to 6.9 years) and average exit timing (from 7.0 to 7.3 to 8.2 years). This trend likely reflected sellers holding out hope for a market upturn during the post-pandemic M&A slump. Consistent with last year’s rebound in M&A activity, 2025 featured a reversal of this trend, with median exit timing dropping from 6.9 to 6.7 years and average exit timing dropping from 8.2 to 7.5 years.

Purchase Price Adjustments (PPAs)

Fifteen years ago, only half of private-target M&A deals included a purchase price adjustment mechanism (PPA). In the years since, they have become almost ubiquitous, appearing in well over 90% of deals.

An important recent trend relates to the accounting methodology applied by a PPA. Whereas previously the most common methodology was GAAP consistent with the target’s past practice, the last three years have seen the “worksheet” approach surpass GAAP in popularity. The “worksheet” approach relies on a specific calculation methodology agreed by the parties (and typically scheduled to the purchase agreement) and featured in 39% of deals in the Study. This is the highest percentage the “worksheet” approach has hit in SRS’ studies. By contrast, GAAP consistently applied dropped to only 32% of deals, the lowest percentage to date for this approach in SRS’ studies.

Regarding other potential components of PPAs, the Study illustrates a clear divide between points more likely to be deal-specific, on the one hand, and those in which market practice is more settled, on the other hand. More variable components include (1) sell-side information rights related to the PPA, and (2) the size of the cap on PPA claims. By contrast, in only 11% of deals in the Study (1) does adjustment only occur if an applicable threshold is exceeded, and (2) does adjustment not exclude tax-related items.

Earnouts

Earnouts staged a small comeback in popularity, appearing in 24% of deals. This remained well below the anomalistic year of 2023, when earnout use surged to 33% of deals on the tail of the pandemic’s disruption to markets. However, this still represented a climb back from 2024 when they appeared in only 22% of deals. Earnout use at 24% of deals also remains well above the historic average for earnouts, which is roughly 20%. Lastly, the median earnout potential as a percentage of the closing payment also staged a small bounce back, climbing from 31% to 34% and matching 2023’s mark. Regarding earnout length, market practice skewed sharply towards 1-2 years (38%) as compared with 1 year or less (23%) or 2-3 years (20%).

For our insights regarding earnout negotiation, drafting and strategy, see Fasken’s Guide to Earnouts in Private M&A.

Escrows

Notably, the size of escrows both in terms of average size and median size increased from 2024 to 2025 across almost all deal categories.

Regarding all escrows as a percentage of deal value:

Regarding indemnification escrows as a percentage of deal value:

Cybersecurity

Sellers appear to be having second thoughts regarding giving representations and warranties regarding cybersecurity. Only 5% of deals in 2024 did not include a cybersecurity representation. This grew sharply to 22% of deals in the Study, a 440% year-over-year growth. One explanation may be concerns arising from rapid developments in artificial intelligence technology as may impact cybersecurity issues, risks and/or exposure.

Indemnification

The frequency of “walk-away” deals took a marked downturn in 2025 relative to 2024, with “no survival” constructs in non-RWI deals dropping to from 18% in 2024 to 11% in 2025.

Similarly, the frequency of deductible baskets saw a year-over-year decline from 39% of deals in 2024 to 32% of deals in 2025, with a corresponding growth in no basket structures (up 6% to 28%) and first dollar baskets (up 1% to 40%). This drop in the use of deductible baskets to 32% is a notably buyer-friendly shift year-over-year and is also well below 2022 (42%) and 2023 (41%).

2025 also marked the continuation of the decrease in the average eligible claim threshold, dropping to 25% compared to 28% in each of 2023 and 2024 and 29% in 2022.

Representation and Warranty Insurance (RWI)

RWI was identified on approximately 46% of deals in the Study.³ It is no surprise that RWI use continues to have a material impact on deal terms. Examples include:

• The highest percentage in the last four years (95%) of RWI deals that include neither a “10b-5” representation nor a “full disclosure” representation.
• The highest percentage in the last three years (28.9%) of RWI deals that do not include any materiality scrape (i.e., whether regarding determining breach only, determining damages only, or for determining both).
• The lowest percentage in the last four years (43%) of RWI deals that include survival of the seller’s representations and warranties.

Looking Forward

M&A activity through Q1 2026 has sustained the strong pace set by 2025, and Goldman Sachs expects continued momentum through the rest of the year despite continued macroeconomic uncertainty. In particular, the firm cites a push by companies to enhance their long-term prospects in the face of artificial intelligence (AI) and the private equity industry’s need to divest long-held portfolio companies to return profits to investors.

Goldman believes that the market has widely adjusted to uncertainty, which many now see as the new normal. That mega deals continue to be announced is also important. These open the door to a domino effect within the impacted industries, often lead to smaller “bread and butter” deals, and buoy market sentiment and aggressiveness overall. The firm also speculates that, with the rapid advancement of AI technologies, sellers could be more motivated to accept prospective buyer valuations for fear of missing exit windows.

As always, the task for dealmakers will be to strive to effectively and efficiently bridge divides between buyers and sellers to get deals done. Deal point studies offer valuable assistance during this process but do not trump deal-specific circumstances and considerations, including as apply in the Canadian context. They are not a substitute for foresight and judicious negotiation strategy.

Footnotes

^{1  For a private M&A deal point study specific to the Canadian market, see https:/www.fasken.com/en/knowledge/2025/02/new-aba-canadian-private-ma-deal point-study-released}

^{2  SRS defines a management carveout as a transaction involving “a portion of deal proceeds guaranteed to seller’s management when management would otherwise receive little or nothing for their equity ownership due to liquidation preferences. Transaction bonuses, which often differ materially from management carveouts in size and timing of adoption, are not included…”}

^{3  As buyers do not always disclose the use of buy-side RWI, the Study’s “no RWI” data sets likely include some deals where RWI was used}