Blog Post
Data Drop: US Direct Lending M&A Activity Dropped Further in 3Q’26, but its Contribution Jumped to Levels not Seen Since Q1’24
M&A activity declined 12% in the third quarter of 2026 to 296 deals, from 336 recorded in the second quarter. While the number of deals declined, the share of M&A activity increased to 64% in the third quarter, as the drop in opportunistic deals such as dividend recaps and refinancings/repricings was more pronounced. This is the highest contribution of M&A activity to total activity since the first quarter of 2024. The large-cap market, comprising deals above $500 million in debt, saw the largest drop, 34%, in M&A activity in the third quarter, following a 27% increase in the second quarter of 2026. The share of M&A activity to overall lending in this market segment was up by 1 percentage point to 60% in the third quarter. In the lower middle-market segment (which is defined by a total deal size of $150 million and below), M&A activity declined by 20% in the third quarter, but its share increased by 7 percentage points to 61%. The upper middle market (defined by a total deal size of $151 million to $500 million), defied the trend as M&A activity rose 16%, with its share rising 17 percentage points to 70%.
This publication has been prepared by Octus Intelligence, Inc. or one of its affiliates (collectively, "Octus") and is being provided to the recipient in connection with a subscription to one or more Octus products. Recipient’s use of the Octus platform is subject to Octus Terms of Use or the user agreement pursuant to which the recipient has access to the platform (the “Applicable Terms”). The recipient of this publication may not redistribute or republish any portion of the information contained herein other than with Octus express written consent or in accordance with the Applicable Terms. The information in this publication is for general informational purposes only and should not be construed as legal, investment, accounting or other professional advice on any subject matter or as a substitute for such advice. The recipient of this publication must comply with all applicable laws, including laws regarding the purchase and sale of securities. Octus obtains information from a wide variety of sources, which it believes to be reliable, but Octus does not make any representation, warranty, or certification as to the materiality or public availability of the information in this publication or that such information is accurate, complete, comprehensive or fit for a particular purpose. Recipients must make their own decisions about investment strategies or securities mentioned in this publication. Octus and its officers, directors, partners and employees expressly disclaim all liability relating to or arising from actions taken or not taken based on any or all of the information contained in this publication. © 2026 Octus. All rights reserved. Octus(TM) and the Octus logo are trademarks of Octus Intelligence, Inc.