martinwolf sees AI uncertainty reshaping middle-market IT deals

martinwolf says uncertainty around AI is driving the key trend in middle-market IT M&A in the first half of 2026, as some buyers pause major decisions while AI-enabling firms win premium valuations. The firm says broader macro pressures like rates and inflation had less impact on deal activity than expected.

Why it matters: - AI is changing how buyers value IT services businesses, especially around margins, renewals and future demand. - Companies positioned as AI enablers may see stronger pricing because buyers expect AI to support growth and profitability. - The shift is influencing which firms buyers pursue and which sectors they avoid.

What happened: - martinwolf said uncertainty around AI and its implications for buyers, sellers and end users was the defining middle-market IT M&A trend in the first half of 2026. - The Scottsdale, Arizona-based advisory firm focuses on lower middle-market IT-sector M&A. - Some private equity firms with long histories in IT services have shifted attention to industries seen as less exposed to AI disruption. - Other buyers have adjusted their models to include AI exposure and AI-related opportunities. - A third group is treating the environment as a value-buying opportunity.

The details: - Seth Collins, managing director at martinwolf, said major unknowns remain around whether AI will coexist with or replace existing software solutions. - Collins said buyers are still assessing how AI may affect contract renewals, demand, the size of future projects and the duration of those projects. - martinwolf said those uncertainties have pushed some buyers to delay major purchase decisions. - The firm said sellers with AI-enabling businesses are benefiting from the disruption. - AI-centric subspaces, including data management, analytics and simulation technologies, are drawing strong buyer interest. - Those businesses can command premium multiples. - Collins said one recent transaction closed largely because the client quickly embraced AI and improved capabilities and value-added offerings.

Between the lines: - The market appears split between buyers who see AI as a risk to legacy IT services economics and buyers who see it as a source of upside. - That split is creating a valuation gap between firms viewed as exposed to AI disruption and firms viewed as enabling it. - Martinwolf said interest rates, inflation and geopolitical uncertainty mattered less than expected for middle-market IT M&A in the first half of the year.

What's next: - Buyers are likely to keep pressure-testing AI assumptions before committing to larger deals. - Sellers with clear AI-related capabilities may continue to attract premium interest. - Future deal activity will likely depend on how quickly the market translates AI impact into pricing, margins and customer demand.