After several years characterized by a hesitant market, corporate dealmaking is demonstrating a significant resurgence, signaling a new era for mergers and acquisitions. CEOs are increasingly re-engaging with strategic acquisitions, their confidence bolstered by stronger balance sheets and a more predictable, albeit still elevated, interest rate environment. This renewed activity is further fueled by private equity firms poised to deploy an estimated $2 trillion in unallocated capital, often referred to as "dry powder," while simultaneously seeking to divest existing portfolio companies. Founders who had previously deferred exit strategies are now re-entering the M&A arena, with artificial intelligence emerging as a dual catalyst, both driving new deal opportunities and enhancing the evaluation process for potential targets.
While the landscape presents a wealth of buy and sell opportunities, significant hurdles remain. The cost of capital continues to be a prominent concern, and a persistent stream of external threats, ranging from geopolitical instability to evolving regulatory frameworks, contributes to an environment of heightened risk and uncertainty. Certain sectors, particularly software, are still navigating the aftermath of the "SaaSpocalypse," a term reflecting the dramatic valuation declines triggered by the advent of AI agents, leading to a challenging market characterized by aggressive discounting. In stark contrast to the 2021 boom, which saw a remarkable 62,000 deals often concluded at inflated valuations, the current M&A climate demands a more nuanced and strategic approach.
Despite these challenges, the first quarter of 2026 has marked a promising start to the year for M&A activity. S&P Global reported that 7,924 transactions, valued at $861 billion, were announced during this period, representing the strongest first quarter since 2021. This uptick suggests a sustained recovery and provides a positive outlook for the remainder of 2026. However, seasoned M&A professionals emphasize that the playbook for successful dealmaking has undergone a fundamental transformation. Their strategies now prioritize meticulous deal sourcing, more rigorous and extended stress-testing of potential acquisitions, earlier and deeper scrutiny of cultural and operational compatibility, and a greater reliance on AI for faster and more intelligent target evaluation.
The "Concierge Approach": Prioritizing Fit Over Speed
For Michael McCann, CEO of Limbach, a company specializing in building systems solutions, a "concierge approach" to potential acquisitions is paramount, where the emphasis is firmly placed on finding the right strategic fit rather than rushing through a transaction. McCann’s philosophy prioritizes an extended courtship period, often spanning six to nine months, and sometimes extending to three or four years. This deliberate pace allows Limbach to conduct an exhaustive evaluation of target companies.
"We want to talk to the company for six to nine months at the bare minimum, and sometimes that ends up being three or four years," McCann stated. Under his leadership, Limbach has successfully executed six transactions since 2021, including the recent $66 million acquisition of Pioneer Power, its largest deal to date.
This extended due diligence period enables Limbach to meticulously scrutinize critical aspects of a potential acquisition. This includes assessing the stability of the target’s workforce and financial performance over several years, identifying potential risks such as over-concentration within its customer base, and evaluating the company’s employee development practices. Furthermore, Limbach seeks to understand how its own resources and expertise can enhance the target’s profit margins and strengthen its overall market position. "We look at the financials multiple times, dig as deeply as we can into the organization and really get to know the people and make sure they understand what their experience will be, because at the end of the day, this is a people-driven business," McCann explained. "We don’t want surprises, and that definitely takes time."
This emphasis on long-term relationship building is facilitated by Limbach’s practice of sourcing its own deals. This proactive approach allows the company to bypass the time pressures and increased costs associated with competing in a traditional auction process. "Often, we’re approaching sellers, who may be at the end of their careers, and almost acting as bankers advising the company," McCann noted. His strategic objective for acquisitions centers on expanding Limbach’s geographic reach or broadening its portfolio of customer solutions.
"Sometimes we’ll talk to companies and they’ll transact with someone else or won’t transact at all. So we kind of concierge owners, laying out the options to help them think long-term as we weigh whether a deal makes sense for us. We want to make sure the puzzle pieces will ultimately fit together." This "concierge" model underscores a commitment to understanding the seller’s long-term vision and ensuring a mutually beneficial outcome.
Building Trust: The "Dating Process" of Acquisition
Michael Reid, CEO of publicly traded Megaport, also champions the power of direct outreach in identifying and executing successful acquisitions. Latitude, a startup that developed software for automating server infrastructure, first captured Reid’s attention when it deployed an ultra-high-speed network between Miami and New York, utilizing a network segment recently launched by Megaport. This initial curiosity led to a direct outreach to Latitude’s founder, initiating a conversation that evolved into a strategic partnership and, ultimately, an acquisition opportunity.
"They came to us looking for investment capital," Reid recounted. "I said, ‘We’re not a VC or PE company, but if we brought our two companies together we could help you scale the business into our customer base. Would you be interested in exploring an acquisition?’"
Latitude’s founder initially expressed reservations, having previously avoided traditional private equity transactions, which often prioritize rapid growth and a swift exit. Reid sought to alleviate these concerns through transparent and candid discussions. "I’m a huge believer that you shouldn’t acquire a company to kill what they’ve built," he stated. "And I had no interest in breaking their culture. We wanted to embrace it and empower them to grow. So that was a dating process. They needed to decide we were the right fit."
Reid highlighted that Megaport’s status as a publicly traded company provided an advantage. "That was important because public companies have an infinite game," he explained. "Our purpose is not to take their company, do something to it and get rid of it. Our purpose is just to grow it forever."
The pre-existing relationship between Megaport and Latitude proved instrumental in navigating the complexities of post-acquisition performance and earnout targets, a common friction point in M&A. The transaction ultimately carried a potential value of approximately $300 million, with half paid upfront in a combination of cash and stock, and the remainder contingent upon a three-year earnout tied to Megaport providing a specified amount of capital and Latitude achieving its growth targets.
Reid emphasized that contract terms designed to align the interests of both companies are crucial for ensuring sustained growth. "I didn’t make their earnout EBITDA, I made it revenue linked to the capex we provide," he elaborated. "The reason that’s important is because [acquirers] can mess around with costs, make cuts that prevent them from getting their earnout. So, in our case it’s super clear, and there is a risk element on both sides of the equation." This approach underscores a commitment to shared success and risk.
Sourcing Proprietary Deals: "Pounding the Pavement" for Success
Jay Jung, CEO of Embarc Advisors, a firm specializing in advising startups on capital raising and strategic mergers and acquisitions, advocates for a proactive approach to deal sourcing, often described as "pounding the pavement." This involves cultivating direct relationships with potential future sellers, laying the groundwork for an inside track should an owner decide to pursue an exit. This strategy also offers a significant advantage in avoiding competitive bidding wars.
"In a sale run by an M&A advisor like ourselves, the reality is that a decent quality business is going to get more than 10 bids from experienced buyers who already know the industry," Jung explained. "So it’s important for first-time buyers to kind of pound the pavement and source their own proprietary deals. And a lot of those deals get done. A big part of deal-making is empathy—it’s not just about the numbers."
Phil Nardone Jr., CEO of PAN Communications, a marketing agency with a valuation of $30 million, successfully employed this strategy. By meticulously reviewing industry journals, he identified award-winning firms and compiled a list of top prospects to approach directly.
"I would tell them what my intent was and ask if they were interested in talking," Nardone recounted. "My success rate on getting a meeting with that first round of emails was 80 percent. People were flattered and honored. Several said, ‘I’m not considering an acquisition but I would love to talk.’ Fast forward, all three of the acquisitions I made began that way."
Establishing Clear Criteria: "Date a Lot of Frogs"
A critical factor in the success of Nardone’s transactions was the development and strict adherence to a predefined list of criteria and goals for each acquisition. This discipline helped mitigate the risk of emotional attachments derailing the process. Viable candidates were required to demonstrate a 20 percent profit margin over the past three years, exhibit strong growth projections, possess compatible cultures, and offer complementary geographic and industry expertise. Nardone’s goal-setting framework also included specific revenue targets.
"Getting it all written out in the beginning was necessary, because I can date a lot of frogs before I kiss the one that’s going to turn into a prince here," he said. "And I can fall in love with the people."
Nardone further emphasized the importance of developing strong relationships with sellers during the courtship phase, especially for middle-market transactions where founders often assume roles within the acquiring entity. To assess leader-to-leader compatibility, he made it a practice to engage in social dining with founders and their partners to openly discuss their post-deal aspirations.
"I got to know them, and they got to learn who I am as not just a CEO but a person," he shared. "I stayed very much focused on culture, people integration and what we would be like post-deal and allowed my CFO to dig into the numbers with their director of finance or CFO, then come back and teach me all about the good, the bad, the ugly."
The objective of these informal discussions was to foster a candid dialogue about the future. "You should talk about succession planning—for yourself, the seller, CEO and founder, as well as your leadership team—openly and honestly," Nardone advised. "That’s huge, because in each case there will be nuances. At that second level, for example, some may be excited to be part of a bigger agency with a bump in comp and a bonus program, while others might want no part of that."
Preserving the "Magic": Integrating Without Diluting
Michael Browning Jr., CEO of Unleashed Brands, adopted a similar approach when identifying and vetting potential acquisitions for his youth enrichment platform company, which focuses on brands serving children. Browning, the founder of Urban Air Adventure Park, was motivated to pursue owners of The Little Gym by a positive personal experience his family had at one of its locations. This led to subsequent acquisitions of Class 101, Sylvan Learning, and Water Wings Swim School.
Browning’s evaluation process begins with fundamental economic viability, assessing the parent company’s financials, the unit economics of franchisees, upward trending same-store sales, and demonstrated profitability. He then poses crucial questions: Is the brand innovative? Do franchisees and operators believe in its core value proposition? Is there a passionate founder or leadership team driving the business? Is there significant potential for brand expansion? Crucially, he asks if Unleashed Brands can enhance the business without compromising its unique essence.
"It’s so tricky," Browning said when discussing cultural and leadership fit. "Systems can be mapped, technology can be upgraded, but culture is hard to define. It’s how people make decisions when you’re not in the room. And when you acquire a brand, you have to be careful. A founder-built brand has a heartbeat. The goal has to be not to replace that heartbeat with corporate processes. You’ve got to protect that magic while adding the corporate muscle."
Browning noted that the departure or diminished role of a founder can lead to demotivation among employees. He emphasizes the importance of upfront discussions regarding founders’ post-deal roles, which can vary from day-to-day operational involvement to brand ambassadorship. "We want them there for as long as they want to be there," he stated. "Some want to continue to be involved in the day-to-day, others want to stay on in a brand ambassador role. Sometimes you have to have flexibility within a framework because it’s not always simple for a founder when you’re buying their life’s work. I always joke, ‘What do you want to be when you grow up?’"
Retaining Talent: Navigating the "Everything is Going to Change" Reality
When a significant portion of a company’s value is tied to its founding team, the departure or reduced involvement of a founder can precipitate substantial employee turnover. Savneet Singh, CEO of PAR Technology, a publicly traded company that has been strategically acquiring complementary software providers to build a unified platform for restaurant and retail chains, observes that early employees are often drawn to startups by their belief in a particular leader, mission, or operational philosophy.
"Early employees pledged at the church of that founder; that CEO convinced them to take a pay cut, believe in equity that may be worth nothing or may be worth a ton. They’ve taken a bet on a human being," Singh explained. His strategy, which has involved seven acquisitions in eight years, including the $27 million acquisition of Bridg in January, has led him to prioritize the retention of founders and their employees in companies with startup origins.
"Our position is to heavily incentivize the core key contributors to stay and become part of the vision, the journey," Singh asserted. "The team at Bridg is really passionate about what they build, so it’s about saying, ‘We share that passion and now, by the way, we have this huge customer base you can sell into—and retention grants and bonuses tied to performance.’"
Singh acknowledges that not all individuals will, or should, embark on this new journey, and identifying this early is beneficial. PAR Technology emphasizes transparency, openly communicating that systems, reporting structures, processes, and even daily routines will inevitably evolve within a larger organization. "Acquirers will come in and say, ‘We acquired you because you’re great; nothing’s going to change,’" he observed. "But the real answer is everything is going to change, from your email address and cybersecurity rules to the systems you use, so we’re completely transparent about that. We tell people: ‘Here’s the uniqueness of our culture. We are wicked passionate about the product you have. And if it’s a good fit, we’re going to do everything in the world to retain you, but if it’s not, let’s discover that now so you don’t waste your precious working hours with us and vice versa.’"
Jeff Helfgott, CEO of Boardroom Salon for Men, a PE-backed men’s grooming brand, echoes this sentiment. Since joining in 2024, he has overseen 10 acquisitions. "You want the people to feel like they’re part of the change, not a victim of it," he stated. "At the end of the day, all businesses are run by people. Not all of them will make the journey with you, but they can sure slow you down if you don’t have the right folks with the right enthusiasm."
The Criticality of Cultural Alignment: "Don’t Let M&A Be Emotional"
A frequently overlooked aspect of due diligence, a lack of cultural alignment can undermine acquisitions that appear financially sound. Brevo, a PE-backed company with a track record of 13 acquisitions across seven countries, including WonderPush and Octolis, vets potential deals for cultural fit with the same rigor applied to financial metrics, product alignment, and synergies.
"We spend a lot of time ensuring we feel good about cultural integration and executive alignment because if we don’t see that, the possibilities drop drastically," said Channing Ferrer, CEO Americas of Brevo. He noted that the cross-border nature of his company’s transactions heightens the need for a thorough assessment of cultural compatibility. "We need to be conscientious about geographic elements: This is a company based in Germany, while we’re based in France; will those cultures work together well enough?"
While cultural fit inherently involves an "emotional evaluation," Ferrer urges those new to the deal-making process to maintain discipline. "Don’t let M&A be emotional," he advised. "Deals will come and go, opportunities will always be there. You don’t want to get caught in the mindset of ‘I spent a lot of time on this deal; I’m going to force it to happen.’ That’s not a good move."
The necessity of balancing emotional intelligence with financial discipline was a recurring theme among dealmakers discussing the current M&A market. While deal-making momentum is undeniably building, the most successful buyers in this cycle are likely to be those who approach acquisitions with intentionality rather than sheer speed or aggression.
"That’s the trick," concluded Browning. "Because there’s hair on every deal, right? But your job as a CEO leading acquisitions is to understand what you’re actually getting and what you’re going to do with it."
