In Arthur J. Gallagher’s Q2 2026 transcript, management outlines a clear valuation reset in M&A, with sellers pulling back on exit pricing and buyers quoting lower multiples. The market shows two narratives—optimistic but unvalidated rhetoric of stable multiples and actual deal data that signal pricing discipline and a slower pace, underscoring a disciplined re-pricing across the market.
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Have you observed changes in exit pricing expectations from sellers and PE-backed buyers given the valuation reset, and what market rhetoric are you hearing about M&A pricing?
Management describes a “massive step change lower in the valuations” across the sector, explicitly asking whether there is “flow-through in terms of expectations from sellers on exit pricing” as a result of the reset. 1 In response, they provide anecdotal evidence that seller behavior is changing: brokers are telling the market that “multiples haven’t changed a bit” and that “pent-up new PE money’s coming in,” but management says “It ain’t happening” and that “Multiples are coming down.” 2
They also connect the reset to sellers’ realizations about prior pricing levels: sellers are “reacting to the reset,” concluding that “the days of 15, 16, and if you’ve got a platform, maybe 17 times EBITDA are over.” 2 Consistent with this, management indicates that while they are “closing deals,” they are seeing “a slowdown in our deal count,” attributing it in part to sellers reacting to the reset. 2
Management acknowledges that there is demand in the form of “backlog of PE-sponsored vehicles… looking for some sunlight,” and asks what rhetoric is being heard from PE in the marketplace. 1 Their anecdotal framing suggests that some intermediaries are pitching to PE/FS buyers a narrative that multiples are stable and new PE money will support pricing—yet management says that narrative is not playing out because “Multiples are coming down.” 2
Separately, management provides concrete evidence that the pricing buyers are paying is lower and/or trending down. They state that they “paid about 9.4 times in the first quarter” and that it “is at 11.3 times here in the second quarter,” followed by additional commentary that, when peeled back, the effective outcome is “down below 11 times, 10 times on the multiple,” and that “we’re clearly down below 11 times, 10 times on the multiple.” 3 Taken together, their commentary supports the view that the market is resetting and that the buyer side is operating at lower effective deal multiples relative to the prior “15x–17x EBITDA” framing sellers are discarding. 23
Management reports two competing narratives circulating in the deal market:
Counter-narrative (optimistic support for pricing): consulting/transaction brokers are allegedly telling the community that if a firm is strong, “those multiples haven’t changed a bit,” there is “an awful lot of demand,” and “Pent-up new PE money’s coming in,” so sellers should “Hang tight.” 2
Management’s counterpoint (reset is real; multiples are falling): management says this message is not being validated in transactions: “It ain’t happening. Multiples are coming down.” 2 They also characterize the change as a “property reset” and compare it to prior soft markets where the market dropped “like a brick across every line all at once,” while implying the current environment is fundamentally different. 4
They reinforce that pricing discipline is being maintained: they “are maintaining our discipline and… closing deals,” but also state directly that “pricing is coming down” and that they “are not in the business of diluting our shareholders.” 2
Yes—both qualitatively (seller behavior) and quantitatively (observed multiples in acquisitions).
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