Private equity firms are preparing to step up dealmaking in the middle market in 2026, as confidence returns and financing conditions improve, according to a new survey by Citizens Financial.

The survey of roughly 400 executives found that 58% expect M&A volumes to rise this year, with private equity firms becoming more willing to transact after a subdued period. Confidence among sponsors has strengthened markedly, with 86% of private equity executives saying they felt confident making M&A decisions in the fourth quarter, compared with 48% in the first quarter.

Respondents cited stronger economic growth, interest-rate cuts, and more attractive valuations as the main drivers behind the renewed appetite. More than half of private equity firms said they expect to initiate deals in the second quarter, ahead of the US mid-term elections, which could introduce additional uncertainty.

Valuations are expected to rise most sharply in technology, media, and telecommunications, as well as financial services and real estate, lodging, and leisure. Activity in wealth management has already picked up, according to the survey.

Artificial intelligence is also emerging as a catalyst. About 39% of private equity firms expect AI-related companies or assets to drive M&A activity, underscoring the sector’s growing influence on deal pipelines.

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