Rochester’s M&A market shows renewed momentum

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The mergers and acquisitions (M&A) market has undergone significant shifts in recent years as interest rates, inflation and broader economic uncertainty have influenced dealmaking.

To get a clearer picture of the current environment, the Rochester Business Journal spoke with professionals involved in M&A from three different but closely connected vantage points — law, accounting and banking — about what they are seeing in the market right now.

Timothy Minneci, executive vice president and managing director of Paramax Corporation, a local investment banking firm specializing in strategic sell-side advisory services, is seeing signs that M&A may be regaining momentum after a turbulent stretch over the past couple of years.

“If we go back just a little bit to 2025, it was a pretty volatile year,” Minneci said. “The first half of 2025 was impacted by a lot of political-type things like tariffs and other uncertainties. When there are unknowns and risks in deals, they tend to slow down a little bit.”

As the year progressed, however, the environment began to shift.

“Everybody sort of got used to it,” Minneci said. “The second half of 2025 got pretty robust.”

That late-year rebound was largely driven by larger transactions, he noted, while activity in the middle market, the space where Paramax primarily operates, remained somewhat more subdued. Still, Minneci said early indicators suggest 2026 could bring broader momentum.

“The expectation for 2026 is that we’re going to continue with that stronger market and that the middle market will begin to be impacted positively as well,” he said. “That seems to be what we’re seeing in the first quarter of the year.”

Several forces are helping to drive activity, including strong investor interest and significant capital still waiting to be deployed.

“There’s a lot of money in the private equity world these days,” Minneci said. “We call it dry powder. They’ve got to deploy it or give it back, and they don’t want to give it back.”

Private equity firms have continued to pursue acquisitions, often through so-called “tuck-in” deals that add smaller companies to existing portfolio platforms. Minneci expects that pattern to continue while also hoping to see more new platform investments emerge in 2026.

Companies attracting significant attention currently are those focused on artificial intelligence (AI) and those that have effectively integrated AI into their operations.

“I like to call them AI-enabled,” Minneci said. “It’s not just the software. It’s how organizations implement AI to increase productivity and profitability. Those types of companies are attractive to buyers.”

Other sectors drawing attention include aerospace and defense, as well as a range of business and industrial services companies.

Despite the improving environment, buyers remain selective and increasingly rigorous in their evaluations.

“Diligence activity going into 2026 has been much more onerous,” Minneci said. “They’re looking for really high-quality opportunities.”

Companies that command the strongest valuations typically share several characteristics, he said, including a strong industry position, solid revenue and profitability, capable management teams and clean operations free of legal or employment issues. Increasingly, buyers also expect mature and reliable financial reporting systems that can integrate easily with their own.

While geopolitical uncertainty and shifting economic conditions remain potential headwinds, Minneci said the M&A market has historically proven strong.

“I find the M&A market to be pretty resilient,” he said. “There will be ups and downs, but it tends to come back to a middle ground.”

From a legal standpoint, Tom Anderson, a partner and head of the mergers and acquisitions practice at Harter Secrest & Emery, is also seeing a continuation of the gradual rebound in M & A activity that began over the past two years.

“2023 was a really slow year after a high point before that,” Anderson said. “Then in 2024 and 2025, there was a bit of a rebound. Last year was a good year. It wasn’t the peak years we saw earlier in the decade, but there was a fair amount of activity and a fair number of large deals.”

Heading into 2026, Anderson said the market appeared positioned to continue building on that momentum.

“When we went into 2026, we had a robust deal pipeline,” he said. “Nothing has changed thus far. Our deal activity in the first quarter has been strong, and right now it projects to be strong for the balance of the year.”

At the same time, Anderson said the broader economic and geopolitical environment continues to create a level of uncertainty that could still influence deal flow.

“What is unknown is what impact geopolitical forces are going to have,” he said. “Where are interest rates going in light of that, and what’s happening in the private credit markets? How those things converge could either have no impact or a significant impact on deal flow.”

For now, however, transactions are continuing to move forward.

“Deals are still moving along,” Anderson said. “I think there’s probably a little bit of a wait-and-see approach in some areas, but activity hasn’t really slowed.”

From a structural standpoint, Anderson said the mechanics of deals in the middle market – where many upstate New York transactions occur – remain largely consistent with what buyers and sellers have grown accustomed to over the past several years.

“In the middle market and lower middle market, you’re still seeing earnouts, rollover equity — especially with private equity buyers — escrows and holdbacks, and sometimes seller notes in smaller deals,” he said.

One area where buyers are showing increased scrutiny is financial diligence.

“There’s been a heightened focus on quality of earnings and significant due diligence around the finances of the target,” Anderson said.

Certain regulatory and compliance issues have also drawn greater attention during the diligence process.

“There’s been a renewed focus on diligence related to immigration and making sure companies have proper documentation and processes in place,” Anderson said, noting that cybersecurity, data protection and intellectual property issues also continue to receive careful review.

Ultimately, Anderson said one constant tends to hold true in the M&A market regardless of broader economic conditions.

“Even in uncertain times, there’s always a market for quality companies,” he said. “Demand may shift and valuations may change, but truly strong companies from both a financial perspective and how they’re managed can typically find someone interested in acquiring them.”

From the accounting side of transactions, David L. Mancuso describes the current mergers and acquisitions environment as active, but more measured than the deal frenzy of a few years ago.

“I would characterize the market right now as active but disciplined,” said Mancuso, CPA, a partner at Withum, an international advisory, tax and accounting firm with an office in Rochester.

That shift reflects a market that has regained momentum while also adjusting to higher interest rates and a more cautious investment climate.

“Deal momentum has returned, especially in the middle market,” Mancuso said. “Financing conditions have improved, and interest rates have seemed to stabilize more recently in 2026, and buyers have adjusted to the current rate environment.”

At the same time, he said, buyers are approaching transactions with greater scrutiny and a stronger emphasis on execution.

“It’s a more thoughtful market than it was a few years ago,” Mancuso said. “There’s more focus on execution.”

From a structural standpoint, accounting professionals are seeing many of the same deal mechanisms that have become common in middle-market transactions over the past several years, though they are playing an increasingly important role in helping transactions move forward.

“Cash at closing always remains the number one goal,” Mancuso said. “But earnouts, seller notes and equity rollovers are playing a bigger role in bridging valuation gaps and managing risk while also helping deals get done.”

Those tools can help buyers and sellers align expectations, particularly in a market where valuations have moderated from the peaks seen in the years following the COVID-19 pandemic.

“Valuation expectations appear to be more realistic and better aligned than maybe a few years ago,” Mancuso said. “Buyers seem to be more comfortable underwriting deals as rates and financing markets have stabilized.”

Still, he noted, strong companies continue to command premium valuations.

“Quality businesses still command strong multiples,” Mancuso said. “Where companies have weaker fundamentals, they tend to get scrutinized more and there can be more pressure on price.”

One area where accounting firms are increasingly involved is helping companies prepare for the rigorous financial diligence that accompanies many transactions.

Preparation, Mancuso said, can make a significant difference in how smoothly a deal progresses.

“Companies that spend the time and effort upfront — for example, by conducting a sell-side quality of earnings analysis — can really streamline the diligence process,” he said. “It reduces surprises and risk and helps with execution.”

In many cases, that preparation includes ensuring financial reporting is clear, transparent and organized before a company formally enters the market.

“Preparation matters more now than ever,” Mancuso said. “Deals are most successful when companies are well prepared, transparent and aligned early on with expectations.”

He also emphasized the importance of experienced advisors in navigating the complexities of transactions.

“Working with experienced transactional professionals can help make a deal more successful,” Mancuso said.

From his vantage point, Mark F. Schuber, senior counsel and a member of the corporate practice group at Harris Beach Murtha, sees an M&A environment that is steadily moving forward, but with a careful eye toward risk.

“I would characterize the outlook right now as cautious optimism,” said Schuber, who notes that while investors and corporate buyers remain active, transactions today are unfolding in a more deliberate environment than the rapid dealmaking seen earlier in the decade.

He has observed that there are still investors and buyers out there looking for the right opportunities, but with a focus on making sure the fundamentals of a deal are sound.

One noticeable shift, he said, is that transactions are increasingly taking longer to complete.

“We’re starting to see a lengthening of deal timelines,” Schuber said. “A big reason for that is the amount of data companies now hold and process.”

Today’s businesses generate and store vast amounts of digital information, from contracts and operational records to customer and regulatory data. As a result, the due diligence process in which buyers review the details of a target company has grown significantly more complex.

“There’s just a lot more information to get through during diligence,” Schuber said. “Buyers want a very complete understanding of what they’re acquiring.”

Technology is helping advisors process that growing volume of information, but it also introduces new considerations.

“Artificial intelligence can certainly increase efficiency when reviewing large amounts of data,” Schuber said. “But with increased efficiency also comes increased expectations. Buyers now expect an even more comprehensive picture of the target company before completing a transaction.”

At the same time, the use of new technology in diligence has introduced additional risk factors that companies must address.

“Firms and companies need to be careful about the AI tools they’re using,” Schuber said. “You have to make sure those systems are properly safeguarded, so sensitive information isn’t exposed or shared outside the intended environment.”

Cybersecurity has also become one of the most significant areas of scrutiny during transactions.

“Companies today are processing extremely large amounts of data every day,” Schuber said. “Buyers want to know that the right cybersecurity frameworks and protocols are in place.”

Weaknesses in those systems can affect both the attractiveness and valuation of a potential acquisition target.

“If there are gaps in cybersecurity or data protection, that can become a significant issue during diligence,” Schuber said. “It can impact valuation or even lead a buyer to walk away from a deal.”

Despite those added layers of scrutiny, Schuber said the underlying drivers of M&A activity remain intact.

“There’s still a lot of capital looking for opportunities,” he said. “With markets stabilizing somewhat, the expectation is that the environment should remain stable and potentially strong over the coming months.”

Caurie Putnam is a Rochester-area freelance writer.