Midcap Advisors: 3Q26 Earnings Preview: Defending The Pipeline Amid Higher Rates

We expect managements to defend strong pipelines and 4Q/2027 conversion despite higher rates, helping separate a 3Q slowdown from a broader cycle break, and add more confidence to advisory growth in 2027. Global announced M&A volume declined -30% q/q and -6% y/y in 3Q26, with advised volumes down more sharply at -34% q/q / -16% y/y, following a record 2Q. Fewer large deal announcements (>$10B fell -44% y/y and -71% q/q) drove the decline, partially offset by a pickup in smaller deals (sub-$10B +11% y/y). Finance was the top M&A sector by volume (13%), followed by Software/Healthcare at 11%, the first quarter since 2023 that Software was not the top sector. We view 3Q as a normalization from a record 2Q, not the end of the M&A cycle;