M&A rebound: the exit window in the German “Mittelstand” is opening again

After a period of restraint, the global deal market is coming back strongly. With global M&A volume reaching US$4.9 trillion in 2025, momentum has clearly returned. What does this macro shift mean for the German “Mittelstand”? Our read is straightforward: the market is moving from a buyer’s market towards a more balanced environment in which quality once again commands premium valuations.

The latest data from Bain & Company’s “Global M&A Report 2026” points to a clear recovery. A 40 per cent increase in volume versus the previous year signals that strategics and financial sponsors are becoming more active again. For the German market for private equity investments, however, one indicator matters even more: the valuation gap is narrowing.

In 2023 and 2024, many processes failed because of the “valuation gap” – the disconnect between sellers’ historical price expectations and buyers’ risk-adjusted willingness to pay. By now, sellers have adapted their expectations to the interest-rate environment, while buyers can once again run models that hold up thanks to a stabilised financing market. Strategic buyers (corporates) are returning to the negotiating table with liquidity, driven by the need to expand their business models technologically or geographically.

For private equity investments in the DACH region, this means that the exit backlog is starting to unwind. But this is not a blanket trend; we see a clear bifurcation. “Tier1 assets” – market leaders with robust margins and proven cash conversion – are again achieving valuation multiples reminiscent of 2021 levels, while average-quality assets remain illiquid or have to accept meaningful discounts.