Calder Capital Founder and Managing Partner Max Friar recently met with Director of Operations Hannelore Jones for a candid discussion on the evolving state of the lower middle‑market M&A landscape. 

Drawing on Calder Capital’s experience advising on more than 380 completed transactions, the conversation covered everything from shifting seller behavior and buyer expectations to deal structure trends and the long-term outlook for transaction volume. 

“We’re seeing the market come back into balance,” Friar explained in this M&A Market Insight Series. In part one of six, Max reflects on how conditions have changed over the past several years. Following a period of uncertainty driven by rising interest rates, inflation, and broader macroeconomic disruption, many business owners chose to delay exit plans. Now, those sellers are starting to re-engage. 

“At a certain point, you can only put off these decisions for so long,” Friar said. “We’re seeing more owners who have been waiting come to market, and they’re being met by a very robust, well-capitalized buyer pool.” 

While seller participation is increasing, demand continues to outpace supply in many cases, reinforcing a competitive environment for well-prepared, well-established businesses. 

A central theme throughout the discussion in part two of six was the role of deal structure in getting transactions across the finish line. Friar noted that many sellers initially approach the process expecting a full cash outcome, often viewing any form of seller financing or structured payments as added risk. However, buyers and lenders view flexibility in structure differently. 

“Deal structure is about mitigating risk on both sides,” Friar stated. “The sellers who are open to things like seller financing or creative structures tend to create a bigger market for themselves and ultimately more leverage in negotiations.” 

Flexibility becomes particularly important in situations where risk factors are more pronounced, such as high customer concentration or significant reliance on an owner’s day-to-day involvement. In those cases, structured deals can help bridge valuation gaps that might otherwise prevent a transaction from closing. 

Another major factor influencing final sales outcomes would be alignment, particularly around valuation expectations. According to Friar, many deals fail before they begin due to mismatched viewpoints between buyers and sellers. 

“We spend a lot of time upfront walking sellers through how buyers and lenders are actually going to evaluate their business,” he said. “If there’s a gap between expectation and reality, it’s better to address that early than spend months pursuing a deal that isn’t going to come together.” 

That upfront work, often involving detailed financial analysis and valuation modeling, helps ensure that businesses entering the market are positioned for success. 

On the Buy-Side, Friar noted that buyers today are narrowing their mandates and becoming more intentional about where they deploy capital.“There are a lot of buyers out there, but they’re more selective,” Friar shared. “Gone are the days of minimal diligence and broad mandates. Buyers want to understand exactly what they’re getting into, and they’re scrutinizing deals accordingly.”  

At the same time, capital remains available and active, particularly in sectors tied to essential services and skilled labor. Industries such as HVAC, roofing, environmental services, and facilities maintenance continue to attract significant interest, driven by steady demand and lower exposure to AI risk and automation. 

“These are areas where we’re seeing a ton of activity,” Friar noted. “For owners in those industries, the timing may be very favorable for them.”  

In Part four of six, the discussion explored the evolving role of private equity in the lower middle market. Over the past two decades, private equity has become a dominant force in M&A, increasingly moving downstream into smaller transactions for bolt-on acquisitions. 

Friar highlighted some of the key differences between private equity and strategic buyers, particularly in how they approach ownership and long-term growth. While strategic buyers may pursue synergies and integration, private equity groups often prioritize continuity, looking for management teams to remain involved and participate in future upside. 

Speaking about PE firms, Friar shared, “They’re looking to align incentives and build value over time.It’s not just about the initial transaction, it’s about what the business can become.”  

For sellers, the “right” buyer ultimately depends on their goals, whether that’s maximizing price, preserving culture, or maintaining involvement in the business post-close. 

Looking ahead, Friar pointed to demographic trends as one of the most significant drivers of future deal activity. While the so-called “silver tsunami” of retiring business owners has been discussed for years, he believes it is now gaining real momentum. 

“I’ve always said it’s been more of a silver trickle,” he noted. “But it’s picking up. There are a lot of business owners in that 65 to 75 range, and they’re going to need to make decisions in the coming years.”  

This increasing wave of retiring business owners entering the market, combined with continued interest from buyers and investors, has generated a continuous, steady increase of M&A activity at Calder Capital, and in the lower middle market, albeit with ongoing discipline around pricing and structure. 

In Part five of six, Friar emphasized curiosity and initiative as critical traits for those looking to enter the M&A field, encouraging students and young professionals to pursue internships and ask questions early and often. 

“Don’t focus on what you think you know, focus on what you can learn,” he said. “That’s what separates people in this business.” 

Ultimately, in part six of six, Friar reinforces a consistent theme conveyed across Calder Capital’s work: successful transactions are built on preparation, alignment, and trust. Max also shares a story on a deal that didn’t go as planned. 

Interested to learn more? For business owners considering a sale, buyers pursuing acquisitions, or professionals looking to understand the market more deeply, the full discussion offers practical insight into how deals are getting done, and what it takes to navigate today’s M&A environment.  

About Calder Capital: 

Founded in 2013, Calder Capital is a cross-industry mergers and acquisitions advisory firm with offices across the United States. Calder provides valuation, sell-side, and buy-side services. We are nationally recognized for excellence in advising $1-100M enterprise value transactions in manufacturing, construction, distribution, and business services. Calder serves business owners, entrepreneurs, family offices, financial buyers, and investors. Learn more at www.CalderGR.com. 

Notice: Calder Capital, LLC is not affiliated with any similarly named organizations or entities. To verify communications from our firm, visit our website or contact [email protected].