2026 M&A Heat Map

By: Kennedy Lewallen

Jan. 14, 2026

After a slower, rate-constrained deal environment over the past two years, the M&A market is entering 2026 with restored momentum. Deal volume is rebounding, private equity firms are sitting on record levels of dry powder, and financing conditions are finally starting to ease from long-awaited rate cuts. As a result, buyers are re-engaging, competition for quality assets is intensifying, and valuation expectations are beginning to reconnect. For investment banks and corporate development teams, this sets the stage for a highly active year.

Just as importantly, this backdrop is opening a window for business owners and sponsors who have been waiting on the sidelines. Certain sectors are already being seen as clear targets for the 2026 M&A cycle. This article takes a closer look at five of the most important themes shaping where capital is flowing, why these industries are attracting both private equity and strategic buyers, what makes companies in these spaces particularly attractive acquisition targets, and why 2026 may be the right time for many of them to consider a sale.

Digital Infrastructure

It comes as no surprise that capital continues to flow aggressively into digital infrastructure, including data centers, fiber networks, and power-enabled services, as the buildout of AI and cloud computing accelerates. McKinsey and JLL estimate that global data center capacity will need to expand dramatically over the next five years to support rising compute demand, creating a surge of investment not only in facilities but also in the contractors, cooling specialists, and electrical service providers that support them. These businesses offer long-term contracted revenue, high switching costs, and scale advantages. This makes them attractive to both private equity firms seeking stable cash flows and strategics looking to secure critical infrastructure. With capacity constraints and heavy capital requirements, many founder-owned and sponsor-backed platforms are turning to M&A as a way to fund expansion, consolidate regional footprints, and lock in valuations while investor appetite remains strong.

Healthcare Services

Healthcare services remain one of the most resilient and transaction heavy segments of the market, supported by demographic tailwinds, fragmented provider landscapes, and recurring demand. PwC and Bain both highlight continued consolidation in areas such as specialty physician groups, behavioral health, post-acute care, and healthcare IT-enabled services, where scale can drive reimbursement leverage, operating efficiency, and technology adoption. These assets tend to generate predictable cash flows and are less sensitive to economic cycles, which appeals to financial sponsors. On the other side, strategics view these acquisitions as a way to expand care networks, improve patient access, and integrate vertically. For many operators, rising labor costs, regulatory complexity, and the need for technology investment are pushing them toward partnerships or exits, making 2026 an attractive time to transact.

Industrial Automation & Electrification

Industrial companies tied to automation, electrification, and advanced manufacturing are drawing increased attention as reshoring trends, supply-chain resilience, and energy transition initiatives continue to reshape capital spending. Corporates are prioritizing acquisitions that provide exposure to robotics, power management, testing and inspection, and specialty components enabling more efficient and resilient production. These businesses benefit from long-term secular growth, strong order backlogs, and opportunities for margin expansion through scale and operational improvements. All of this aligns well with private equity value-creation playbooks and strategic buyers’ portfolio realignment efforts. Many mid-sized operators in this space face rising capex needs and competitive pressure, making the sale to a larger platform or financial sponsor an attractive path to fund growth and remain competitive.

Business Services

The business services sector continues to be a core hunting ground for buyers due to its combination of recurring revenue, fragmentation, and core system offerings. Areas such as compliance, testing and certification, outsourced back-office functions, and tech-enabled professional services benefit from high customer retention and steady demand regardless of economic conditions. PitchBook data shows that sponsor activity in business services has remained consistently strong, supported by the ability to execute roll-up strategies and drive operational efficiencies. Strategics view acquisitions as a way to broaden service lines and deepen client relationships. Many founder-owned firms in this sector are reaching succession points or seeking liquidity after years of growth, while still commanding attractive multiples due to their stable cash flow profiles.

Energy & Power Infrastructure

Energy and power-related infrastructure services are emerging as another key theme, driven by electrification, grid modernization, and rising power demand from both industrial activity and digital infrastructure. Harris Williams and other advisory firms note increasing investor interest in transmission services, engineering and construction, and specialty maintenance providers that support generation and grid reliability. These assets often operate under long-term contracts, benefit from regulatory support, and face high barriers to entry, making them appeal to both infrastructure-focused private equity funds and strategic utilities or energy companies. For many regional operators, the scale of investment required to meet future demand is encouraging consolidation, positioning 2026 as a great year for strategic combinations.

Why 2026 Is a Sellers Window

Beyond sector-specific dynamics, broader market forces are also aligning in favor of sellers. As interest rates ease, leveraged buyouts become more feasible, which improves purchase price support and widens the pool of qualified buyers. At the same time, private equity firms are under pressure to deploy record levels of capital and to generate realizations from aging portfolio companies. This is increasing both buy-side competition and sponsor-to-sponsor exit activity. Strategic acquirers, with stronger balance sheets and renewed confidence in economic stability, are also returning to the market to secure growth and capabilities. For founders, demographic succession issues, rising operating complexity, and the need for investment in technology and scale are further motivating factors to consider a sale while valuations and liquidity conditions are favorable.