Seyfarth Releases 2026 Middle Market M&A Survey Highlighting Evolving Deal Terms and Risk Allocation Trends

September 29, 2026 - Seyfarth Shaw LLP has released its 12th annual Middle Market M&A SurveyBook, analyzing key transaction terms from more than 160 middle market private target acquisition agreements to show how buyers and sellers are using deal structure to gain negotiating leverage, bridge valuation gaps, and manage post-closing risk. It provides buyers, sellers, private equity sponsors, investment bankers, and other deal professionals with insight into current market standards and negotiation trends.

Middle market M&A activity entered 2025 on stronger footing, with deal volume and value rebounding as buyer confidence improved after a challenging 2024. Although tariff-related uncertainty during early 2025 temporarily slowed activity and widened valuation gaps between buyers and sellers, confidence later improved as those concerns moderated and companies increasingly turned to M&A as a strategic tool to drive growth and strengthen competitive positioning.

“This year's survey highlights how dealmakers continue to adapt transaction structures and deal terms in response to evolving market conditions,” said Andrew Lucano, Seyfarth’s national Corporate Department chair and co-chair of the firm’s Mergers & Acquisitions practice. “We saw increased earnout activity and continued growth in the use of R&W insurance, underscoring the market’s focus on finding creative ways to get deals done while balancing competing risk and valuation concerns. The survey offers a practical snapshot of current market terms and the trends shaping middle market M&A negotiations today.”

“While market participants continue to monitor interest rates, inflation, geopolitical developments, and AI-related risks, the broader outlook for middle market M&A remains favorable,” added Aaron Gillett, M&A practice vice chair. “An increasing number of baby boomer-owned businesses are expected to come to market in the years ahead, creating a significant pipeline of acquisition opportunities for private equity, strategic, and independent buyers.”

Notable findings from Seyfarth's 2026 Survey include:

R&W Insurance: Approximately 62% of the transactions reviewed for the 2025/2026 Survey included R&W insurance, compared to approximately 53% in 2024/2025.
Earnouts: Earnouts appeared in 19% of surveyed deals, up from 13% in 2024/2025, with 67% of those deals tying earnout payments to between 10% and 50% of the purchase price, suggesting growing use of earnout structures to help bridge valuation gaps between buyers and sellers.
Escrow Amounts: The median indemnity escrow amount for non-insured deals increased to 10% of purchase price, reflecting a less seller-favorable shift for this deal term as buyers increasingly hold back a larger portion of the purchase price for these deals in escrow.
Escrow Periods: The median indemnity escrow period for non-insured deals remained at 12 months, continuing a trend of seller-favorable, relatively short escrow periods.
Survival Periods: The median general survival period for non-insured deals declined to 15 months from 18 months in 2024/2025, which is a more seller-favorable shift, while the median survival period for insured deals remained at 12 months.
Carve Outs: Tax representations remained among the most commonly carved out, appearing in 80% of non-insured deals. This is a significant increase from the 66% reported in 2024/2025 and 68% reported in 2023/2024.
Indemnity Baskets: Threshold/tipping baskets continued to gain traction in non-insured deals, accounting for 43% of basket structures in 2025/2026. This reflects a continued buyer-favorable shift, up from 32% in 2024/2025.
Indemnity Caps: The median indemnity cap remained 10% for non-insured deals and 0.3% for insured deals, highlighting the significant differences in risk allocation for sellers between insured and non-insured transactions.
Fraud Exceptions: Fraud exceptions remained nearly universal, appearing in 88% of non-insured deals and 95% of insured deals.
Governing Law: Delaware continued to be the most popular governing law choice, applying to 78% of surveyed deals.
Privilege Retention: Of the 2025/2026 deals surveyed, 76% provided for the seller to retain attorney-client privilege after the closing of the transaction.

The complete 2026 Survey provides detailed analysis of these and other middle market M&A trends, including year-over-year comparisons and data regarding transactions with and without R&W insurance. To view Seyfarth’s 2026 Middle Market M&A SurveyBook, please visit here.

Seyfarth’s Mergers & Acquisitions practice provides domestic and cross-border advice on a wide range of complex M&A and other corporate transactions and applies a constructive and proven approach to a broad range of clients, from public and privately held companies to private equity firms and family-owned businesses, with a sweet spot in middle market transactions.

Seyfarth’s Corporate department offers clients a full-service, multidisciplinary team of attorneys across virtually all areas of practice. The Corporate group works with an array of businesses from large well-known companies to start-ups and is highly regarded for its deep knowledge of mergers and acquisitions, securities, investment management, corporate counseling, financing, and commercial transactions.

About Seyfarth

With more than 1,000 lawyers across 19 offices, Seyfarth Shaw LLP provides advisory, litigation, and transactional legal services to clients worldwide. The firm is recognized for leading the market in client-centric innovation, advancing the standard of legal service delivery in an evolving global marketplace.

Seyfarth collaborates with clients to capitalize on opportunities and solve complex challenges across capabilities, including corporate, litigation, real estate, regulatory compliance, labor and employment, and executive compensation and employee benefits. Committed to collaboration and a client-centered approach, Seyfarth delivers solutions as sophisticated as the challenges clients face.