This is our first market update of the year. We intentionally stayed quiet in the first quarter because January felt too early to start making predictions about where 2026 was headed. Waiting turned out to be the right call.

Before getting into the market itself, 2025 was a strong year for our firm. We completed four sell side transactions, three of which were publicly announced. We also advised on several others and had a few that did not make it across the finish line for reasons outside the control of either buyer or seller. The beginning of 2026 has continued at a healthy pace, with new clients pursuing a sale and others reconsidering whether now is the right time to explore their options.

With activity levels in the market generally consistent with last year, I thought it would be worthwhile to address a few concerns we are seeing in the lower middle market, particularly for businesses in the $500,000 to $10 million EBITDA range.

Rather than trying to cover all of it in one note, we are going to address these themes as a short series over the next few updates. These are not just transaction issues. They are market issues, and they affect owners whether they are planning to sell now or not.

The Truth About the Buyer Pool

There is no shortage of inbound interest in today’s market. Owners are hearing from private equity firms, independent sponsors, search funds, family offices, holding companies, individual investors, and an increasing number of brokers claiming to have interested parties. On the surface, that sounds like a positive sign. In reality, much of it is noise.

The buyer pool looks deeper than it really is. A lot of the interest being presented to owners is early stage, lightly qualified, poorly aligned, or simply not serious enough to matter. Visible interest is not the same thing as actionable interest. That distinction matters more than ever.

For some context on this, the annual Pepperdine Capital Markets Survey asks Private Equity Groups how many deals they look at to close one deal. The median is 98 and the 3rd quartile is 300! Of those 98, they are taking 10 meetings, providing an indication of interest on five of them, signing to LOI’s and closing one deal.

image from LinkedIn

None of this means the broader buyer universe is a bad thing. It is not. More types of buyers can create real opportunities. But it does mean owners need to be careful about how they interpret the activity around them. A crowded inbox does not necessarily mean a crowded buyer pool.

That is one of the defining features of this market right now. There is a lot of movement, but not all of it means much. The challenge is not finding people who say they have interest. The challenge is identifying the ones who are truly interested and can meet an owner’s transition objectives.

That is why we tell prospective clients that our job is not necessarily to find buyers. This market produces plenty of interest on its own. Our job is to find the right buyers. A lot of owners think the work ends once interest appears. In our experience, that is usually where the real work starts.

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