On January 27th, Aethlon Founder and Managing Principal Sima Griffith spoke on a panel of investors and advisors at the Capital Markets & M&A Update hosted by FEI Twin Cities and Private Directors Association.
Panelists agreed that 2025 was uneven, but the foundation for 2026 is materially stronger.
Below are a few takeaways of note:
2025 Recap and the 2026 Setup
- 2025 was choppy, driven by uncertainty. Deal activity in the lower- and middle-market declined 27% through Q3 (GF Data). The main obstacle? Uncertainty. Tariffs, trade policy, and regulatory ambiguity complicated diligence and created buyer hesitancy.
- Private equity firms leaned heavily into add-on acquisitions, which accounted for roughly 75% of M&A in 2025 (PitchBook). Rather than investing in new platforms, buyers prioritized lower-risk small acquisitions to add to their existing portfolios.
- Conditions are improving for 2026. The Federal Reserve made three interest rate cuts in 2025, improving deal economics. Private equity dry powder remains at historic levels (Aethlon’s database has grown from 150 PE firms a decade ago to over 2,500 today), and buyer urgency is increasing as funds feel pressure to deploy capital.
Sectors Drawing the Most Buyer Attention
The panel highlighted several hot sectors for M&A activity:
- Technology (AI & Cybersecurity): Premium valuations persist, particularly for AI and cybersecurity companies. Two prime examples are Google’s $36 billion acquisition of Wiz and Minnesota-based Atomic Data’s acquisition of Venue Wireless.
- Healthcare: Demographics like the aging population are driving acquisitions. A recent example is UnitedHealth Group’s $3.3 billion acquisition of home health care provider Amedisys.
- Manufacturing: Reshoring and supply chain resilience are creating renewed interest in U.S. manufacturing companies.
- Pet Industry: With roughly 70% of U.S. households owning pets (compared to about 40% with children), Millennials and Gen Z are fueling sustained growth and deal activity.
Understanding Different Buyers
Strategic and financial buyers approach acquisitions differently:
- Strategic acquirers often pay higher valuations due to operational synergies, but the trade-off is they tend to move more slowly and involve layered approvals.
- Private equity firms factor in costs (hiring a CEO, adding salespeople, funding growth investments) that impact the price they are willing to pay, but they typically can close faster and have a clear execution plan.
Both strategics and PEs need to make acquisitions: Publicly traded companies need to show growth, and PE funds need to show their limited partners they are investing—or else return their capital.
Positioning for Success in 2026
The gap between successful and stalled sale processes continues to widen. The differentiators are familiar but often underestimated:
- Preparing early: Anticipating buyer questions about customers, sales tax, and operations—and clearly highlighting company growth drivers.
- Running a competitive process: Reaching a broad, qualified buyer universe to create competitive tension and maximize value.
- Navigating complexity: There’s a saying in M&A: “A deal dies nine times before the finish line.” Most business owners go through this once; experienced advisors have done it hundreds of times and know how to overcome deal challenges.
The Bottom Line
Favorable economic conditions, lower borrowing costs, and plentiful private equity capital are creating a promising environment for well-prepared sellers.
At Aethlon, we focus on preparation, perspective, and execution. So, when the window opens, our clients are ready to move with confidence toward a successful outcome. Whether you’re actively considering a sale or simply want to understand how these market trends could affect your business, our team welcomes the conversation.
To schedule a conversation, please Contact Us.
