00:00Q3 M&A activity is facing a complex market backdrop with economic uncertainty, shifting deal multiples, and the high cost
00:08of AI infrastructure, all shaping how companies approach deal making.
00:13Joining us now to break it all down is Dina Jalbert, CEO of Align Business Advisory Services.
00:18Thank you so much for being here today, Dina. We really appreciate it.
00:21My pleasure.
00:23Yeah, there's so much to get to here. I mean, just to start off, how would you characterize the state
00:27of M&A activity as we move through the first quarter of 2026?
00:32And our company is really becoming more confident about getting deals done now.
00:36I think so. I think the market, as we sit here kind of midway through 26, is the most active
00:43it's been since the pre-rate kind of hike, you know, rate hike era.
00:49But it's not necessarily uniform across all sectors. It's kind of a, I don't know, a tale of two markets,
00:54if you will.
00:55There's premium businesses that are transacting at really strong multiples and everything else.
01:01Some of it is just kind of sitting and waiting.
01:03And so really that bifurcation, I think, is you're still seeing it in deal activity broadly.
01:10There's some mega deals that are being announced, but then the rest of the market is kind of quiet.
01:15So it remains to be seen. But I think the outlook overall is that, you know, in today's macroeconomic environment,
01:23the volatility is just a kind of core.
01:27It's known. And so folks are just plowing ahead regardless and trying to make the most of it rather than
01:33continuing to sit and wait because they've been doing that for some time now.
01:37Yeah, that's such a good point. This volatility does not seem to be going anywhere anytime soon.
01:42So people are just making the best of it at this point and kind of forging ahead.
01:45When you're talking about those different industries, different sectors, some of them being stronger than others right now,
01:51which are you really seeing driving the most M&A activity right now?
01:55Is it technology, health care, industrials, energy? What are you seeing out there?
02:01Yeah, really, I mean, I think obviously top of the news and what we're all seeing and reading about is
02:06AI and really anything that is tangential and synergistic to AI.
02:11I think that really the AI infrastructure that is needed, even hyperlocally, when you think about the utility grid,
02:19I know that's getting a lot of attention and the energy and wastewater requirements of this technology is on the
02:27tops of everyone's tongues.
02:29And so by virtue of that, that's going to boil down to your local trade contractors who are going to
02:35be the ones who are going to be boots on the ground having to stand these things up.
02:40And so I think you're going to see more and more investment there.
02:43I know those are sectors that private equity in particular are really thirsty for.
02:48You're seeing some of the public, private equity firms investing in industrial infrastructure, wastewater, utilities, road and rail as well
02:58in terms of being able to build all of this out.
03:02So I think that's going to continue and that's a bright spot.
03:05I think we're also interestingly going to see a lot of activity in food.
03:09I think what we're seeing, it's interesting in consumer products and foods, we're seeing a little bit less brand specific
03:17and more component specific.
03:19Like you look at the McCormick and Unilever, you know, food deal that recently happened, you know, $40 billion.
03:26It was a really quiet deal, but I think, you know, they're buying global distribution and it's not specific to
03:34any necessarily, you know, one brand.
03:36It's really the kind of larger food distribution, global food distribution play.
03:42And so this is, that's a long-term play and not, you know, not a short-term earnings play.
03:46So there's a lot of unique things happening, I think, across sectors.
03:50And then I, you know, I've also been interested to watch a lot of the media deals that have been
03:56happening lately.
03:57You know, we keep hearing and reading about the Paramount Warner Brothers deal.
04:01I think content is king, right?
04:03As consolidation shifts around who holds what rights to what content and capturing consumers' attention as streaming becomes the norm,
04:12you're going to see more and more demand and more and more of these types of deals take place.
04:17Yeah, I agree.
04:18I mean, seeing all of that consolidation shift, as you're talking about, is really changing the landscape out there.
04:22I mean, thinking about some of these deals that have already closed earlier this year, how is that showing up
04:27in second quarter's earnings?
04:29And what are you really seeing in terms of the financial impact of those acquisitions?
04:33Yeah, so what I'm seeing is that it's starting a buy and build strategy.
04:37So those kind of marquee deals have now created a waterfall of subsequent M&A that's going to be taking
04:44on and growing.
04:45So they're going to be investing and growing on the thesis out of those mega deals.
04:49So it's going to kind of, again, it's going to, using AI as an example, you're going to start to
04:54see a lot of money and a lot of capital investment drive into the infrastructure.
04:57So you're going to see smaller deals, again, in hyperlocal locations, and they're going to be much smaller.
05:03You won't see them as much, but you're going to start to see them pop into their quarterly earnings reports
05:08as we go forward here in order to be able to enact this strategy.
05:14Because it's one thing to do these mega deals that have already closed, but then, okay, you know, how are
05:20you going to grow on top of that?
05:21How are we going to grow organically, but then inorganically as well?
05:24And with the market volatility that we were just discussing, a lot of folks are looking to that inorganic growth
05:30because it's the fastest way to put earnings on the board and to get to where they want to go
05:35and execute on these theses.
05:37Yeah, it makes a lot of sense as people are looking to the future and saying, okay, what can I
05:41actually do here as we move forward with these companies that I've now acquired?
05:45Thinking about kind of deal multiples, what's happening there right now?
05:48Are valuations expanding, contracting, becoming more selective as buyers adjust to market conditions?
05:53What do you see?
05:54Yeah, you know, what we're seeing is really they're holding steady.
05:58They remain really strong.
05:59And that is due to there's just so much capital out in the market, both public and private.
06:04But, you know, private equity and especially the publicly traded private equity funds are sitting on trillions of dollars of
06:12undeployed capital that they have raised and have not yet spent.
06:16And there's also a large exodus of portfolio companies that they have been holding for the past, call it four
06:24or five years, really since 21, that they've been sitting on that those are going to also need to transact
06:31and recycle capital.
06:32So what does that mean really at the end of the day?
06:34There's a tremendous amount of money out there looking for M&A opportunities.
06:38So it's supply and demand.
06:39There's a large demand out there.
06:42People are willing to pay up.
06:43However, I will say that they are still being disciplined.
06:46And valuations aren't they haven't ticked up to that white hot era that we saw in 2020 and 2021, per
06:56se, it they're still strong and they're still certainly the strongest they have been since really in on record, even
07:04pre pandemic.
07:05But they aren't kind of outsized, if you will.
07:10And so they've buyer and seller expectation has has come more in line.
07:14And that's why we've seen the uptick in volume take place here in 26, especially in deal size.
07:21And I think we're going to continue to see more of that.
07:24So I think, you know, valuations remain strong.
07:27There's tons of money that has to find a home.
07:29And PE is going to have to get to work here in IPOing or exiting their holdings here soon because
07:37the clock is ticking.
07:38Yeah, it seems like it really is.
07:40It definitely is there.
07:41I mean, just looking towards the end of the year, what do you think we're going to be seeing more
07:45of as we head towards the end of this year?
07:47Again, there's so much with AI and energy that we've been talking about, all of this volatility and uncertainty around
07:52the world as well.
07:53How do you think all of that is going to impact things as we move forward for the rest of
07:56this year and beyond?
07:57Yeah, I think you're going to continue to see quite a bit of transactions in industrial products and services broadly.
08:04The infrastructure that we need, you know, manufacturing and on-shoring with some of the global volatility that we've had
08:11continues to be a theme and a narrative.
08:12So you're going to see quite a bit of investment and growth there.
08:16You know, obviously, as we were just discussing with AI, infrastructure is going to be huge.
08:21So industrial, again, it's another tangent of the industrial products and services.
08:27So I'm very bullish on industrials, something we do quite a bit of here.
08:32I also think that, you know, health care is going to also continue to be an area of focus.
08:38I think a lot of the pharma news and the advancements in pharmacology, especially GLP-1s and peptides and all
08:47the things that you've been hearing and reading about in the kind of preventative wellness space is going to continue
08:52to expand.
08:53And I think the advances that are going to come out of that R&D are coming so quickly that
08:58by the end of this year, you're going to be seeing, again, consolidation there and folks trying to buy market
09:04share in a race to that R&D discovery.
09:07So I think you're going to see a lot of dollars deployed there.
09:10And then the third tenet is going to be PE exits.
09:13I think you're going to see a lot of PE IPOs or big, you know, strategic sales, if you will,
09:21you know, big price tags on some of those portfolios that they've been holding now for five, seven years.
09:26They need to get that money back to their shareholders.
09:28You've been reading about some of the angst in private credit and the fact that they haven't been able to
09:33return some of the capital.
09:35And there's a lot of pressure there.
09:36So I think by the end of the year, you're going to start to see those deals matriculate.
09:40Yeah, it sounds like we will.
09:41And we have a lot to now keep our eye on.
09:43So thank you so much for walking us through all of this.
09:46Dina Jalpert, CEO of Align Business Advisory Services.
09:48We really appreciate you being here today.
09:51My pleasure.
