Sellers’ valuation expectations remain one of the biggest obstacles to closing M&A transactions in Southern Europe. According to the latest Dealsuite Southern European M&A Monitor, advisors reported that sellers’ expectations were too high in 53% of deal processes in H1 2026. On average, the valuation gap reached 26%, and in 38% of these cases, it ultimately caused the deal to collapse.
The study, which covers the mid-market in Spain, Italy, Portugal and Greece, highlights how buyers and sellers are increasingly using deal structures to bridge valuation differences. Deferred payments and other risk-sharing mechanisms are becoming more common, while in Iberia, earn-outs, sometimes combined with rollover or sweet equity, are increasingly used to close valuation gaps.
Buyer demand remains strong
Despite valuation challenges, buyer interest remained stable. Companies attracted an average of 8.4 serious buyers in H1 2026, unchanged from the previous year. Interest increased particularly strongly in Industrial & Manufacturing, which reached 12.3 interested buyers per company, followed by Business Services at 9.2 and Automotive, Transportation & Logistics at 6.6.
IT Services and Software Development remained the most sought-after sectors overall, attracting 14.3 and 13.7 interested parties, respectively. Overall transaction activity also remained resilient, with 47% of advisors reporting an increase in completed deals, compared with only 12% reporting a decline.
Valuations remain stable
The average EBITDA multiple in the Southern European mid-market remained unchanged at 5.4x. However, company size continues to have a significant impact on valuations: businesses generating €200k of EBITDA traded at an average multiple of 4.0x, compared with 7.6x for companies generating €10M of EBITDA.
This valuation gap illustrates the continued premium commanded by larger, more established businesses, while smaller companies face a discount reflecting their higher perceived risk.
Business Services expected to lead H2 2026
Looking ahead, sentiment remains highly positive, with 92% of advisors optimistic about H2 2026. Business Services is expected to experience the strongest growth in deal activity, followed by Industrial & Manufacturing and Healthcare & Pharmaceuticals. Meanwhile, Automotive, Transportation & Logistics, Retail Trade, and Media & Communication are expected to see weaker activity.
Overall, the research points to a resilient Southern European M&A market, with transaction activity moving increasingly upmarket. However, the persistent disconnect between sellers’ expectations and market valuations remains a major challenge, and an important consideration for buyers and searchers approaching potential acquisitions.
The research is based on input from 119 M&A advisory firms out of 422 contacted across the Southern European mid-market, representing a 28% response rate.
Read the full report here: https://www.dealsuite.com/en/resources/reports/southern-european-monitor
