Toy M&A Forecast for 2026. Start the Conversation at Toy Fair

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Email: steve@globaltoyexperts.com

Projection

In 2026, toy M&A is likely to be more active than 2023–2024, but selective: more deals get done, yet buyers stay disciplined on price and favor assets with durable IP, licensing flywheels, and/or recurring digital revenue.

Why 2026 looks more constructive for deals

• Private equity is under pressure to transact (exits + deployment). Senior bankers are publicly flagging that financial sponsors may accelerate dealmaking to return capital and restart fundraising cycles.
• Broader M&A sentiment is improving into 2026. Major advisors are pointing to easing rates/volatility and healthier equity markets as supportive conditions for deal activity.
• Category fundamentals improved in 2025 (helps sellers + confidence). U.S. toy sales returned to growth in 2025 (+6% dollars; +3% units), with licensing and higher-value purchases contributing.
• “IP-to-play” strategy is intensifying. Large players are leaning hard into entertainment partnerships and licensed franchises (often a precursor to capability buys in licensing, digital, and content).

What kinds of toy deals are most likely in 2026

1) Digital + “phygital” capability buys

• Expect more acquisitions of mobile/game studios, digital publishing, live-ops capability, and kid-safe platforms—especially by toy companies that want to diversify away from purely seasonal retail.

2) Licensed IP, collectibles, “kidult,” and fandom brands

• Assets with proven licensing velocity (and global fan bases) should stay bid up, because licensing is showing it can lift both units and ASPs.
• Partnerships like Hasbro + Warner Bros. Discovery around Harry Potter reinforce how central big franchises are to growth plans.

3) Early childhood + evergreen “trusted” brands

• Buyers like category leaders and PE will continue to like preschool / early learning brands with durable demand and cleaner SKU complexity (historically resilient). Recent precedent: Spin Master acquiring Melissa & Doug.

4) Supply-chain advantage, margin structure, and “domestic/nearshore” narratives

• With tariff/trade uncertainty still disrupting retailer ordering patterns and costs, brands with better sourcing, flexibility, and margin resilience should command a premium—and stressed operators can become forced sellers.

Pricing / valuations in 2026: likely steady, with a split market

• A useful “rule of thumb” from banker survey data: typical and premium deals averaging about ~3.8x and ~9.8x EBITDA expectations (varies a lot by quality/sector).
• Two-track market is likely:
  • Premium track: top IP + licensing engines, collectibles, digital/recurring revenue, international scale.
  • Value/distressed track: promo-heavy businesses, inventory issues, retailer concentration, tariff exposure.

Deal structures we’ll probably see more of

• Earnouts / contingent value tied to sell-through, licensing milestones, or game KPIs (helps bridge valuation gaps).
• Carve-outs of non-core brands/business units as strategics sharpen focus and fund reinvestment.

Bottom-line projection for 2026

Base case: moderately improved deal flow, led by sponsor-driven activity and strategic tuck-ins in digital, licensing, and resilient subcategories—while “plain” toy companies without IP leverage, recurring revenue, or supply-chain advantages face tougher pricing and may transact only if they’re carved out or stressed.