In an environment shaped by political instability, geopolitical tensions and sustained cost inflation, French mid-sized companies (ETIs) are seeing increasing pressure on both margins and cash flow. Yet more than half are maintaining or even stepping up their external growth strategies, underscoring the central role of M&A in their development agendas.
Insights and analysis by the experts at AURIS Finance, an M&A advisory firm.
In 2026, profitability among French ETIs remains fragile, as highlighted by the 19th edition of the Palatine–METI barometer published in March. While one-third of surveyed companies still reported declining revenues in 2025, this proportion is down compared to the previous year. Conversely, 45% are now seeing growth in activity, pointing to a gradual recovery.
Order books also show signs of improvement: fewer than 30% of ETIs now consider their backlog to be below last year’s level, compared with nearly one in two just a few months ago.
However, this recovery remains fragile. Rising costs continue to weigh structurally on profitability, whether in terms of energy, wages or financing.
Deteriorating cash positions
Cash flow remains a primary concern for executives: more than one in three companies report a deterioration over the past year, a proportion that has increased since the end of 2025.
Against this backdrop, companies are limiting their use of debt, which remains broadly stable. Around a quarter of ETIs face difficulties in servicing their financing, while constraints related to banking covenants are tightening. More than 43% of companies now consider their financial ratios difficult to meet, if not unsustainable.
Growth projects under scrutiny
Despite these pressures, ETIs continue to access financing: more than 83% report receiving a positive response from their banking partners.
That said, the current environment is driving greater prioritization of projects. In 2026, just over half of ETIs plan to launch new development initiatives, compared with 70% a year earlier. France’s political and budgetary context is weighing on decision-making: in the absence of clear visibility, executives are opting to postpone certain structuring investments.
Strong resilience in external growth
In contrast to this more cautious stance on organic growth, external growth remains robust. More than half of ETIs are either considering or have already initiated transactions in 2026. In an uncertain environment, M&A is seen as a key lever to accelerate development, access new markets, and strengthen competitive positioning. It also enables companies to reach critical scale in consolidating sectors.
Another strong signal: more than two out of five ETIs have been approached for an acquisition or equity investment since the beginning of the year. This dynamic confirms the attractiveness of these companies to both financial and strategic investors.
In this context, external growth is becoming a structuring tool for transformation and for securing long-term trajectories.
Our experts by your side
In an environment marked by ongoing cash constraints, margin pressure and limited visibility, ETIs must adapt their financial strategies. Structuring financing and leveraging external growth are now key levers to support their development.
AURIS Finance teams support executives at every stage of their transactions: strategy definition, target identification, financing structuring, and deal execution.
