State of Industrial Tech: What Q2 2026 Tells Us

Industrial tech rarely gets covered on its own terms. It tends to get folded into broader industrials coverage or lumped in with hardware, which makes it difficult for founders and owners in the space to benchmark themselves against anything meaningful. We built the State of Industrial Tech to fix that, and we will publish it every quarter with the same facts and figures so the trend line is comparable over time.

The first edition, covering Q2 2026, is now available. Here is what it contains and what the data is telling us.

The universe we track

The report is built on two datasets. The public side covers 90 listed companies with a combined market capitalization of $2.1 trillion, selected because their core products serve industrial, infrastructure, energy, defence and mission-critical end markets. The M&A side covers 2,008 North American industrial tech transactions announced between January 2020 and June 2026.

Both are classified into the same nine subsectors: Test & Measurement, Instrumentation & Sensing; Industrial Automation & Robotics; Industrial IoT, Telematics & Connected Operations; Building, Safety & Physical Security; Electronic Components, Power Electronics & Photonics; Electrification, Grid & Power Infrastructure; Defence, Space & Mission Systems; Intelligent Transportation & Smart Infrastructure; and Comms & Networking Equipment.

Companies and targets are classified by product fundamental rather than by end customer. Defence classification requires defence or government end markets. Canadian targets are identified from headquarters disclosures.

Public markets have repriced, but not evenly

Over the last twelve months, our equal-weighted Industrial Tech Index gained 108% against 21% for the S&P 500. Close to half of that spread opened between March and June 2026 as AI-infrastructure capex guidance stepped up, and those commitments convert into multi-year backlog for the power and component suppliers inside the build-out.

Median public EV/revenue reached 5.6x in Q2 2026, up from 2.9x in Q3 2024. Median EV/EBITDA reached 23.6x, up from 17.6x over the same period. Fundamentals moved with the multiples rather than lagging them. Median LTM revenue growth doubled from 6% to 13%, and median EBITDA margins expanded from 16% to 19%.

The averages hide a wide spread. Electronic Components, Power Electronics & Photonics returned 219% over the LTM and Comms & Networking Equipment returned 216%. Both supply the physical layer of the AI data centre, where qualified optics and power-conversion capacity is set to run short of demand for years. At the other end, Building, Safety & Physical Security fell 3% and Intelligent Transportation & Smart Infrastructure fell 32%.

Growth is what sets the price. Companies growing 15% or more trade at 10.1x revenue against 3.8x for slower growers, a premium of 165%. On EBITDA the gap is 42.1x versus 20.4x. Cost programs improve earnings. Growth improves earnings and the multiple applied to them.

Deal volume is re-accelerating

Industrial tech recorded 166 transactions in the first half of 2026, running 14% ahead of the same period last year. Q2 alone produced 77 deals against a trailing four-quarter average of 76. At the current pace, 2026 annualizes to roughly 332 deals, the strongest year since 2021.

Activity is heavily concentrated. Defence, Space & Mission Systems accounted for 95 of 305 LTM transactions, or 31% of the total. Add Electrification, Grid & Power Infrastructure and Test & Measurement, and three subsectors account for 216 of 305 deals, or 71%. Two spending cycles explain most of it. Governments are rearming, which is pushing defence suppliers together, and AI data centres need far more power and grid capacity. Test and measurement sells into both.

Private valuations have not tracked the public re-rating. Median disclosed transaction EV/revenue is 1.9x pooled across the full period, with a range of 1.1x to 3.5x. Median disclosed EV/EBITDA is 14.4x. Read those figures with the sample in mind: only 8% of transactions disclose a revenue multiple and 3% disclose an EBITDA multiple, and the ones that do skew toward larger, cleaner assets.

That divergence is the central finding of the quarter, and it is what our Barometer is designed to capture. The index reads 46.2 for Q2 2026, up 9% from Q1 and the highest of the last five quarters, but still below the neutral 50 line. Public multiples score 78 out of 100. Private multiples score 26 and private deal count scores 35.

Strategics are setting the price

Strategic acquirers completed 257 of the 305 LTM transactions, or 86%. Industrial tech M&A is largely adjacency-driven, and incumbents such as Amphenol, Hexagon and Eaton can integrate niche technologies into broader platforms, sell them through existing channels and capture product, procurement and R&D synergies. That supports valuations sponsors cannot justify on standalone economics. Amphenol was the most active buyer of the period with four transactions and $11.5 billion in disclosed value.

Private equity is being selective rather than absent. When sponsors do transact, they pay for quality. Francisco Partners acquired Blackline Safety at 5.4x revenue, roughly three times the market median. Sponsor interest remains a useful read on how a business is viewed by a wider audience.

The Canadian picture

Canada produced 40 transactions over the LTM, or 13% of the North American count, with 23 of those falling in the first half of 2026. That puts the country on pace for its strongest year in the dataset.

Two flagship exits accounted for $2.1 billion in combined value. ESAB Corporation acquired Eddyfi Technologies for $1.5 billion, and Francisco Partners acquired Blackline Safety for $593 million. Both went to foreign acquirers at nine-figure-plus valuations. Canadian industrial tech has quietly built companies with global scale, and international buyers have noticed. The country is no longer a discount market for tuck-ins.

What comes next

The Q3 2026 edition will refresh the Barometer and grade the four calls we made for the quarter. It will publish roughly three weeks after quarter-end.

The full report includes the complete subsector map, quarterly multiple series, the league table of top deals, the most active acquirer bench and our detailed methodology, and you can download it here.