Business owners considering a sale often want to know whether the market is good enough to sell.
Are buyers active? Are valuations holding up? Are private equity firms still acquiring companies? Would waiting another year lead to a better offer?
These are reasonable questions, particularly in a market where interest rates, economic uncertainty, and changing investment priorities can influence how buyers approach acquisitions.
The latest M&A activity offers a useful reminder that the market is not moving in one direction for every company. Global deal value declined sharply in the third quarter of 2026, yet broader activity for the year remained substantial. Meanwhile, lower middle-market dealmakers have continued to report interest in quality businesses, even as buyers become more selective and transactions take longer to complete.
For owners of privately held businesses, the takeaway is not that it is suddenly a bad time to sell. It is that preparation, realistic expectations, and the ability to demonstrate a compelling acquisition opportunity matter enormously.
M&A Activity Has Slowed, But The Market Has Not Disappeared
Global mergers and acquisitions activity pulled back in the third quarter of 2026. Reuters reported that worldwide deal value totaled approximately $993 billion, a 41% decline from the second quarter. Higher borrowing costs, rising energy prices, and uncertainty around interest rates contributed to the slowdown. However, global deal value for the year remained strong through the third quarter, reaching approximately $3.9 trillion, according to the report.
The distinction between quarterly activity and the broader market is important. A decline in total deal value can reflect fewer large transactions, a change in the timing of major deals, or a pullback in certain sectors. It does not mean every buyer has stopped pursuing acquisitions.
In the lower middle market, the picture can be different from the headlines about multibillion-dollar transactions. Buyers may continue looking for established service businesses, specialized companies, and acquisition targets that support an existing platform's growth strategy.
For business owners, national deal totals provide useful context, but they are not a direct forecast of what an individual company will sell for. Industry, profitability, customer concentration, management depth, financing requirements, and buyer demand can all influence the outcome of a transaction.
The market is not one single pool of buyers behaving in the same way. It is a collection of industries, company sizes, buyer types, and individual acquisition strategies.
Buyers Are Becoming More Selective
One of the most important developments for owners to understand is the difference between a buyer being interested in acquisitions and being willing to pursue any particular business.
Capital may be available, but buyers still need to justify the investment. When financing is more expensive or economic uncertainty increases, they may place greater emphasis on the quality and predictability of a company's earnings.
Recent lower middle-market commentary has highlighted more extensive scrutiny of financial performance, growth assumptions, customer concentration, and transaction risk. Advisors have also reported that valuation expectations can become a major obstacle when buyers and sellers cannot agree on what a business is worth.
That scrutiny can affect companies in several ways.
A business with reliable earnings, diversified customers, clear financial records, and a capable management team may give buyers greater confidence in the acquisition. A company with inconsistent reporting, unexplained margin changes, or significant dependence on one customer may face more questions.
Neither situation automatically determines whether a transaction will close. But when buyers have more choices and are carefully evaluating risk, owners need to be prepared to support the story they tell about their businesses.
This is especially relevant for founder-led companies. An owner may understand exactly why revenue fluctuated last year or why a particular expense increased. A buyer will not necessarily have that context unless the owner can explain it clearly and support the explanation with reliable information.
The more questions a buyer must resolve before feeling comfortable, the more difficult it can become to maintain momentum through the transaction process.
The Lower Middle Market Has Its Own Dynamics
Large public-company transactions often dominate M&A headlines because of their size. Yet privately held businesses with a few million dollars in annual earnings operate in a different part of the market.
Their buyers may include independent strategic acquirers, private equity firms, family offices, individual investors, and companies already owned by private equity sponsors. Each category has different objectives, resources, and acquisition criteria.
A strategic buyer may be looking to expand into a neighboring territory or add a complementary service. A private equity firm may be seeking a platform for future acquisitions. A sponsor-backed company may want to acquire a smaller competitor to strengthen its geographic coverage or broaden its service offering.
These strategies can create opportunities even when broader market conditions are uncertain.
For example, a regional commercial services company may be an attractive acquisition target for a larger operator that already has the management infrastructure and customer relationships needed to support expansion. The buyer may see an opportunity to increase scale without building a new operation from scratch.
But that does not mean every company in the same industry will receive the same level of interest. Buyers will still evaluate earnings, operational quality, competitive position, and the cost of integrating the business.
For owners, the practical lesson is to understand the buyers most likely to value their specific company rather than relying entirely on general market headlines.
Valuation Expectations Can Make Or Break A Deal
One of the most common challenges in a business sale is a gap between what the seller expects to receive and what the buyer believes the company is worth.
That gap can become more difficult to bridge when financing costs rise or buyers become more cautious about future growth. A seller may base expectations on a strong prior year, a competitor's reported sale, or a valuation multiple they heard about from another owner. A buyer may apply different assumptions about earnings sustainability, capital requirements, or future performance.
Both sides may believe their positions are reasonable, yet the transaction can stall if they cannot reconcile the differences.
This is why owners should distinguish between a company's financial performance and the price the market may be willing to pay for it. Strong EBITDA is important, but valuation also reflects the durability of those earnings, the company's growth prospects, the level of risk, and the interest of qualified buyers.
It is also important to understand that a headline valuation is not the same as the amount an owner ultimately receives. Transaction structure, debt, working capital, fees, taxes, seller financing, earnouts, and other terms can affect the economics of a sale.
A well-informed seller evaluates the entire proposal rather than focusing exclusively on the largest number in an offer.
Why Waiting For A Better Market Can Be Risky
When headlines become less encouraging, some owners decide to wait until conditions improve.
That may be the right decision for certain businesses, especially when there are specific improvements the owner can make before going to market. But waiting is not automatically a strategy.
A business may become more profitable over the next two years, but market multiples could also change. Interest rates could move in either direction. A competitor could enter the market, a major customer could leave, or the owner could simply lose interest in continuing to run the company.
The outcome depends on several variables, many of which are outside the owner's control.
A more useful approach is to assess what the business could realistically accomplish by waiting. Could earnings improve? Could customer concentration decline? Could a management team be strengthened? Could the company expand recurring revenue or reduce operational risk? Would those improvements meaningfully change its attractiveness to buyers?
Owners should also consider their personal objectives. Someone who wants to continue building the business for another decade may make a different decision from someone who wants to diversify their wealth or reduce the risks associated with having most of their financial assets tied to one company.
There is no universal answer to when an owner should sell. The important thing is to make the decision based on the business, the owner's goals, and the available opportunities rather than assuming that a better market will inevitably arrive.
Preparation Becomes More Valuable When Buyers Are Cautious
A selective market does not make preparation less important. It makes it more important.
Owners who may sell in the next few years can begin by reviewing the company's financial statements and making sure reported earnings are supported by documentation. They can identify unusual expenses, understand the drivers of margins, and ensure that proposed adjustments to EBITDA are reasonable and defensible.
They can also evaluate customer concentration, recurring revenue, contract stability, management depth, and the degree to which the company depends on the founder. These factors can influence how a buyer assesses risk and how confidently the buyer can forecast future performance.
A clear growth story matters as well. Buyers want to understand where the business has been, what drives its current results, and what opportunities remain. A credible plan supported by evidence is more compelling than an optimistic projection without a clear explanation of how it could be achieved.
Perhaps most importantly, owners should understand the range of buyers that could be interested in their company. A business may have value to a strategic competitor, a private equity-backed platform, or an investor with a specific acquisition strategy. The strongest potential buyer may not be the one an owner initially expects.
A thoughtful sale process can help identify those parties, evaluate their proposals, and create a clearer understanding of the market for the business.
A Changing Market Makes Buyer Selection More Important
In an active market, owners may receive interest from several parties. In a more selective environment, identifying the right buyers and understanding their acquisition priorities can become even more consequential.
Different buyers may place different values on the same company. One may be attracted to its earnings, another to its geographic footprint, and another to its customer base or specialized capabilities. The objective is to find buyers who can recognize the opportunity and have the resources and intent to complete a transaction.
That requires more than distributing information widely. It means understanding the company's strengths, developing a credible financial story, identifying relevant buyers, and managing the process so interested parties have a clear path to evaluate the opportunity.
At Exit Stage Left Advisors, we help business owners evaluate their options and navigate the sale process with a focus on achieving the strongest possible outcome. Market conditions matter, but so do the quality of the business, the buyers who are reached, and the way the transaction is managed.
Conclusion
The M&A market in 2026 is sending a mixed message. Global deal value declined in the third quarter, while overall activity remained substantial and buyers continued to pursue selected opportunities. For privately held businesses, that means neither extreme is particularly useful: assuming every company will command a premium is unrealistic, but assuming the market has closed is equally misleading.
Buyers are evaluating opportunities carefully, paying close attention to earnings, risk, growth, and strategic fit. Owners who understand their financial performance, prepare for scrutiny, and identify the right potential buyers can be better positioned to navigate that environment.
The best time to understand your options is before you need to make a decision. Whether an owner chooses to sell now or continue building the business, knowing how buyers view the company can help turn uncertainty into a more informed strategy.
