Q1 2026 Market Update:
Business Transactions
in the $1–10 Million Range

Introduction

This report examines M&A activity in the U.S. market for companies with enterprise values between $1-10M. It leverages Q1 2026 data from IBBA, BizBuySell, DealStats, KeyBanc, and internal insights from Calder Capital’s Sell-Side and Buy-Side teams. Companies in this range are typically established businesses that appeal to strategic acquirers, private investors, and lower middle market financial buyers.

$1-5M

Market Activity and Sentiment

Deal Volume Trends

Sam Scharich, Buy-Side Managing Director at Calder Capital, noted, “While overall volume was slightly down Q1 of 2026, compared to Q1 of 2025, activity picked up sequentially as deals pushed out of Q4 began closing early in the new year.” 

Overall, the market continues to reflect a “value over volume” dynamic, where buyers remain competitive but are concentrating heavily on fewer, yet higher-quality acquisition opportunities. Increased activity among lower-priced transactions in this segment and fewer  large middle market deals overall kept the median sale price relatively flat (BizBuySell). 

Performance divergence across industries remained a defining feature of the market in Q1 2026, reinforcing a widening gap between high-performing, resilient businesses and those more exposed to cost pressure, macroeconomic factors, or other sources of volatility from geopolitical change. Service-based businesses, particularly those with recurring revenue, local market positioning, and limited exposure to tariffs, continued to command strong buyer interest and, in many cases, premium pricing. In contrast, capital-intensive and import-dependent businesses faced greater scrutiny, longer diligence timelines, and more structured negotiations as buyers evaluated margin resilience and operational risk. 

Valuation data supports this selective buyer environment. DealStats data indicates that EBITDA multiples for privately held companies have remained relatively stable and in line with 2025 levels, offering steady pricing expectations for businesses. Buyers continue to seek companies with strong fundamentals, including consistent revenue and cash flow, stable or expanding margins, limited customer concentration, and an experienced management team. 

Market Direction

Strategic buyers, financial buyers, and individual acquirers remained active in Q1 2026, though behavior has shifted toward greater buyer selectivity rather than reduced buyer demand. 

Financing conditions improved at the start of the year, which supported M&A activity, with increased debt availability and slightly more favorable lending terms compared to late 2025. Simultaneously, the federal government announced new, advantageous, SBA loan changes for LMM acquisitions. However, these improvements in access to debt were not evenly felt across the M&A market. Smaller transactions continue to face tighter underwriting standards, particularly for businesses with exposure to cost volatility or those with inconsistent earnings performance. 

At the same time, macroeconomic uncertainty, including escalation and continued instability in key global regions, such as the ongoing Russo-Ukrainian War and the 2026 Iran War are impacting key energy-producing regions, resulting in volatility in oil and gas prices; these geopolitical events have ultimately tempered decision-making. These dynamics have extended timelines and increased diligence requirements, particularly for businesses without clear earnings stability. As a result, the market is currently defined by active buyers operating with heightened scrutiny and evaluation standards, rather than a lack of capital or interest. Valuation and overall transaction data from DealStats and IBBA further define this selective environment.  

Buyer & Seller Conditions

Data from IBBA and DealStats indicates that valuation levels in the $1–5M segment remained relatively stable in Q1 2026, though recent trends point to modest multiple contraction, particularly at the upper end of the market. Variation across transactions continues to be driven more by company-specific performance than broad-based shifts. 

Given the size of businesses in this segment, Seller’s Discretionary Earnings (SDE) multiples are generally a more relevant valuation metric than EBITDA. SDE represents total financial benefit to a single owner-operator, including net income, owner compensation, discretionary expenses, and non-recurring items. 

At a high level, market data suggests the following directional SDE multiple ranges across core industries: 

• Manufacturing: ~2.5x–4.5x SDE 

• Construction: ~2.0x–4.0x SDE 

• Distribution: ~2.5x–4.5x SDE 

• Services: ~3.0x–5.5x+ SDE 

These ranges should be viewed as indicative rather than prescriptive, with realized multiples increasingly dependent on earnings consistency, margin stability, and overall business quality. Strong, well-documented businesses continue to transact toward the higher end of ranges, while companies with less predictable performance or greater exposure to cost volatility are more likely to clear at lower multiples or require additional structure to bridge valuation gaps. 

Buyer & Seller Conditions

Buyer demand in the $1–5M segment remained strong in Q1, particularly among individual buyers and first-time acquirers. BizBuySell reports a continued influx of corporate professionals they characterize as “corporate refugees” entering the market. These professionals are often heavily motivated to make a career transition, many citing concerns of losing their existing jobs to AI, and are seeking stable, cash-flowing businesses as they pursue greater fulfillment in their professional life. These buyers remain highly engaged in evaluating opportunities. BizBuySell states that 49% of buyers in this segment are “corporate refugees,” up from 44% in Q4 2025. 

Entering 2026, buyer expectations have become more refined. There continues to be a clear preference for businesses with: 

• Consistent or growing cash flow 
• Limited customer concentration 
• Minimal exposure to tariffs or supply chain disruption 
• Opportunities with operational scalability or margin improvement 

Garrett Monroe, Sell-Side Managing Director at Calder Capital, stated, “Seller sentiment improved modestly heading into 2026, with more owners coming to market following a stronger finish to 2025. That said, pricing expectations are still creating friction in some processes, particularly where recent performance doesn’t fully support prior valuation benchmarks.” 

Deal Structure and Financing

SBA financing conditions improved relative to Q4 2025 and SBA 7(a) loans continue to serve as the primary financing tool; however, stricter lending standards have heightened diligence requirements and buyer selectivity (BizBuySell). These dynamics, combined with evolving eligibility requirements, including updated SBA guidelines restricting financing to 100% U.S. citizen-owned businesses, have narrowed the buyer pool and increased underwriting scrutiny, particularly in smaller transactions. As highlighted in Calder Capital’s January and March 2026 Buy-Side Updates, these changes are actively impacting buyer qualification and deal execution, even as overall pipeline activity remains strong. 

Sam Scharich, Buy-Side Managing Director at Calder Capital, noted, “At a practical level, this doesn’t change what makes a good deal, but it does change how deals can get done. With improved financing in certain areas, lenders are more comfortable deploying capital, which can create more flexibility in deal structure and increase the likelihood of transactions getting across the finish line.” 

Rudy Moeller, M&A Advisor at Calder Capital commented, “In today’s market, deal structure has become more important than ever. While sellers continue to prioritize cash at close, buyers are increasingly focused on mitigating risk, leading to greater use of structured elements such as seller financing and targeted earnouts to align expectations and facilitate transactions.” 

Recent IBBA data suggests that buyers in this segment have been, on average, providing more cash at close, at 87% of the value of their offers.  

As a result, successful transactions in Q1 have generally had: 

• Clean financials 
• Well-documented earnings 
• Realistic pricing expectations 
• Flexibility on structure where needed  

Economic Context

Q1 Evaluation

BizBuySell reported modest improvement in sold-business financials in Q1 2026, with median cash flow rising 3% and median revenue increasing 2%, but those gains did not extend evenly across the market. Buyers remain active but are increasingly focused on the durability of performance, placing greater weight on businesses’ ability to sustain margins and cash flow under continued economic, geopolitical, and inflationary pressure. This has reinforced the ongoing divide between high-quality companies and those with inconsistent earnings results, with service-oriented businesses, particularly those with recurring or essential revenue streams, continuing to outperform businesses in other industries in terms of buyer demand, pricing, and overall transaction activity. 

Financing remained a meaningful constraint in the $1–5M segment, particularly for buyers dependent on SBA loans. As Q4 transitioned into early 2026, the Federal Reserve held rates at 3.25%–3.50%, reinforcing a high-cost capital environment. SBA‑dependent transactions, which are prevalent in the $1–5M range, continue to feel the effects of tighter lending standards that have limited buyer qualification and extended timelines. 

More broadly, businesses exposed to volatile input costs, international supply chains, or discretionary consumer demand are facing increased scrutiny, pricing pressure, and longer deal execution periods. Tariff‑related cost uncertainty and tighter underwriting standards are expected to persist into 2026, further reinforcing a more selective deal environment. 

Despite these dynamics, transactions continue to close, particularly for well‑prepared businesses with diversified sourcing, stable margins, and clean financial reporting. While AI remains an active topic in diligence, it has not yet meaningfully impacted valuations in this segment, with buyers continuing to prioritize fundamental performance over emerging technology considerations. 

Current Q2 Market Conditions

Looking ahead, activity in the $1–5M range is expected to remain steady, supported by continued buyer demand and improving, though still changing financing conditions. 

Preparation will remain the key differentiator for sellers. Businesses that are well-prepared, demonstrate consistent financial performance, and align pricing expectations with current market conditions are expected to transact efficiently. 

Conversely, deals involving weaker financial profiles or external risk factors may require additional structure, extended diligence, or pricing adjustments to close. 

The potential end of the Iran war and declining fuel prices could also improve overall economic stability, increase seller confidence, and bring more businesses to market. These dynamics would likely support higher transaction volume in the second half of 2026 and into 2027. 

Overall, the M&A market enters Q2 2026 with a healthy pipeline and active buyer participants, but company quality, seller preparation, and realistic valuation expectations will help define outcomes. 

$5-10M

Market Activity and Sentiment

Deal Volume Trends

Q1 2026 had an active, yet more selective M&A environment in the $5–10M segment, with buyers remaining engaged but increasingly focused on quality and scalability of systems and product offerings. While broader M&A activity saw a decline in total deal count, overall transaction value increased in this segment, reinforcing a continued shift toward fewer (but larger and higher-quality) transactions (KeyBanc). 

Within this segment, deal flow and demand remained stable for well-positioned businesses, particularly those with recurring revenue, strong margin profiles, and operational excellence. However, execution timelines lengthened for companies with less predictable performance, as buyers applied more rigorous diligence and underwriting standards. 

Riley Hagen, Sell-Side M&A Associate at Calder Capital stated, “Valuation trends in Q1 were somewhat mixed. While broader data suggests modest multiple compression in certain industries and companies above $100M in enterprise value, we’re still seeing high-quality businesses in the $5M-$10M segment transact at pricing similar to last year, as buyers continue to remain focused on operational strength and resilience when facing of tariffs, inflation, and geopolitical uncertainty.” 

Market Direction

Buyer demand in the $5–10M range continues to be largely driven by a mix of strategic acquirers, private equity groups, and independent sponsors. 

Financing conditions improved in early 2026, particularly for larger and more established businesses, as debt availability increased and pricing became more competitive compared to late 2025 (GF Data). However, these improvements were not evenly distributed, and financing for smaller, SBA-dependent transactions remained more constrained. 

At the same time, macro uncertainty continues to influence market behavior. Persistent inflation, rising geopolitical volatility, and evolving interest rate expectations have led buyers to focus more heavily on downside protection and long-term value creation.  

The M&A market remains active overall, but progress from LOI to close has become more dependent on alignment between buyer and lender underwriting and company-level performance (BizBuySell). 

Valuation Multiples

DealStats and IBBA data indicate that EBITDA multiples in the $5–10M segment remained generally stable in Q1 2026, with modest variation based on company quality and industry dynamics. While broader middle-market valuations experienced some pressure, particularly in transactions above $100M, multiples in this segment have remained largely in line with recent historical norms for well-performing businesses.  

At a high level, valuation ranges across core industries in the $5–10M segment are consistent with those observed in the lower-middle market, with premium valuations concentrated in businesses demonstrating recurring revenue, strong margins, and scalability. Indicative multiples include: 

• Manufacturing: 5.0x EBITDA 
• Construction: 5.5x EBITDA 
• Distribution: 5.3x EBITDA 
• Services: 5.9x EBITDA 

Within this segment, dispersion of performance and, therefore demand remain a defining feature. High-quality businesses with strong financial performance, diversified revenue streams, and operational depth, including established systems, scalable processes, and a management team capable of supporting growth, continue to transact at the upper end of valuation ranges, while companies with inconsistent earnings or greater exposure to external risk factors are more likely to transact at lower multiples or require additional structuring to achieve desired outcomes. 

Buyer & Seller Sentiment

The $5–10M segment is a strategic entry point for financial buyers and corporate acquirers, given the relative maturity and scalability of businesses at this level. 

Buyer sentiment remains positive, but due diligence processes are demanding more time and attention of both parties , as stricter lending standards and heightened diligence requirements have increased buyer selectivity (BizBuySell). In this environment, buyers are prioritizing high-quality, cash-flowing businesses and placing greater emphasis on fundamental performance. Across Q1, buyers placed increased emphasis on: 

• Margin durability and consistency, as buyers increasingly evaluate whether core fundamentals, including margins and scalability, support long-term performance (IBBA). 
• Recurring or contract-based revenue, reflecting buyer preference for stable, predictable cash flow and resilient business models (BizBuySell). 
• Limited customer concentration, as buyers apply greater scrutiny to concentration risk and favor businesses with more stable, diversified revenue streams (BizBuySell). 
• Operational infrastructure and management depth, as heightened diligence requirements are driving greater focus on documentation, processes, and scalability (BizBuySell). 
• Resilience to macro and industry-specific risks, as buyers increasingly prioritize businesses that can withstand economic uncertainty and external volatility (BizBuySell). 

Businesses that met these criteria in Q1 2026 attracted competitive interest and, in some cases, premium valuations. Conversely, companies with inconsistent performance or exposure to external cost pressures faced extended diligence processes and more conservative offers. 

Seller sentiment improved modestly entering 2026, with more owners coming to market following the stronger close to 2025. However, seller valuation expectations have begun to recalibrate, as owners adjust pricing expectations to align with current buyer underwriting and market conditions. 

“At a certain point, you can only put off these sales 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.”  

Deal Structure and Financing

Alex Flechsig, Buy-Side M&A Associate at Calder Capital commented, “In the $5M-$10M  segment, we start to see a greater reliance on conventional senior debt, mezzanine debt, and private credit rather than SBA financing or seller notes.” 

Deal structures in Q1 continued to balance cash at close and other, structured elements. While upfront capital remains a priority for buyers, transactions increasingly incorporate additional components, including: 

• Seller financing, which remains a common feature of deal structures, with 61% of buyers reporting a preference for seller financing as part of transactions. 

• Performance-based adjustments, used to bridge valuation gaps and align expectations between buyers and sellers, particularly where underwriting assumptions differ. 

• Selective earnouts or contingent payments, increasingly used in situations where expectations diverge, as tighter lending conditions and greater scrutiny make fully cash-based structures more difficult to achieve. 

These tools are being used less as a necessity and more to bridge valuation gaps and align incentives, particularly in situations where future performance carries greater uncertainty. 

“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.”  

Overall, well-capitalized buyers with clear investment theses and dry powder continue to move and acquire decisively, while deals requiring more complex financing, underwriting, or fundraising tend to progress more slowly. 

Economic Context

Q1 Evaluation

Sellers in the $5–10M segment entered 2026 with solid underlying buyer demand present, but a more selective acquisition environment, as buyers increasingly focused on higher-quality businesses with strong financial performance, scalability, and margin durability. 

Edson Ramirez, Buy-Side M&A Advisor at Calder Capital commented, “Private equity firms are leaning into more add-on acquisitions as they are generally seen as opportunities for lower-risk deployment of capital. Financial buyers are coming to Calder with more of a preference for expanding existing platforms rather than launching new ones.” 

Overall, the $5-10M segment remains sought after with higher demand as less larger targets are coming to market. Success for sellers is continuing to be tied to exit preparation, performance consistency, and flexibility with various deal structures. 

Current Q2 Market Conditions

The Q1 data and the observations and anticipations of those on Calder Capital’s Buy-Side and Sell-Side teams suggest that Q2 2026 will present continued, strong buyer demand, an improved supply of businesses for sale, and slower execution due to more extensive due diligence periods. Tariffs are forecasted to remain a central macroeconomic variable impacting both buyers and sellers, and uncertainty around SBA policy changes and interest rates will continue to shape both deal structure and lender behavior. 

Deals are expected to take longer; diligence periods are expected to remain expanded, and buyers may continue to underwrite more cautiously, particularly around issues such as high customer concentration, low supplier reliability, and margin durability. 

Businesses with diversified sourcing, strong financial documentation, and stable cash flow will continue to remain best positioned to command premium valuations in early 2026. Meanwhile, we expect manufacturing and distribution companies may continue to face valuation pressure until cost conditions from tariffs, inflation, and increased gas and oil prices stabilize. 

Disclaimer

This Market Update is provided for informational purposes only and does not constitute legal, financial, investment, or other professional advice. The information contained herein is based on sources believed to be reliable; however, Calder Capital makes no representations or warranties, express or implied, as to the accuracy, completeness, or timeliness of the content. Market conditions are subject to change without notice, and past performance is not indicative of future results. Readers are advised to consult with their professional advisors before making any business or investment decisions. Calder Capital expressly disclaims any and all liability that may be based on the information contained in this report.

Q1 2026 Market Update:
Business Transactions
in the $10-25 Million Range

Introduction

This report analyzes market conditions for U.S. businesses transacting at enterprise values between $10-25M. Insights are drawn from Q1 2026 data compiled by KeyBanc Capital Market Reports, PitchBook, GF Data, and Calder Capital’s Sell-Side and Buy-Side teams as of May 2026. 

$10-25M

Market Activity and Sentiment

Deal Volume Trends

Q1 2026 presented a more selective backdrop for companies in the $10–25M range, as overall deal volume declined while transaction value increased, indicating that buyers concentrated capital on fewer, yet stronger-performing opportunities. PitchBook reported that global M&A reached an estimated $1.6 trillion in Q1 2026, up 50.6% year over year, but it also emphasized that the quarter was unusually top-heavy and that one $250 billion transaction materially inflated the headline numbers. 

Garrett Monroe, Sell-Side Managing Director at Calder Capital noted, “What we’re seeing at the transaction level is that processes are still moving, but they’re moving slower. Buyers are spending more time validating assumptions around margins, customer concentration, and growth, and deals that might have progressed quickly a year ago are now facing additional diligence or structure before they close. The demand is still there, but the path to getting a deal done has become more deliberate.” 

KeyBanc’s report shows the total U.S. announced M&A transaction count down 29.1% year over year, from 4,264 transactions in Q1’25 to 3,022 transactions in Q1’26, reinforcing the idea that Q1 was defined by fewer deals and more value concentrated in larger transactions, rather than a broad-based improvement in the lower middle market and the middle market. 

Market Direction

The quarter was defined by buyers becoming more selective about where and how they deployed capital. Improving credit conditions were a key driver of activity, with debt availability increasing and average senior debt pricing on platforms falling to its lowest level since 2022 according to GF Data. In addition, recent SBA policy changes, including the introduction of the ‘Made in America’ loan guarantee, have begun to support financing availability for certain domestic manufacturing transactions by increasing SBA guarantees from 75% to 90%/ This lowers the lender’s risk since more of the loan is backed by the SBA, which enhances buyer purchasing power for qualifying deals. Together, these dynamics contributed to a financing environment characterized by improved debt availability for businesses with more predictable earnings, stronger margins, and lower execution risk, but continued underwriting discipline and selectivity for businesses with less predictable performance in the $10–25M segment. 

Shane Kissack, Buy-Side M&A Advisor at Calder Capital noted, “What we’re seeing in the market is that improved financing hasn’t changed what qualifies as a strong opportunity, but it has changed how those deals get structured and executed. Lenders are more willing to support the acquisition of higher-quality businesses, which allows buyers to be more competitive in their offers on those assets, while deals that have more operational or financial risk are taking longer, requiring more equity, or additional structure to close.” 

PitchBook similarly noted that although financing conditions improved and supported activity at the top end of this segment, strict lender underwriting remained prevalent, particularly for private equity–backed transactions and borrowers with less predictable revenue, margin variability, or inconsistent earnings performance.  

Valuation Multiples

GF Data indicates that EBITDA multiples in the $10–25M segment remained relatively stable in Q1 2026, with valuation levels generally clustering in the mid-5x range for completed transactions, with some variation across industries. 

Variation of valuations within this segment continues to be driven primarily by industries and company-level performance rather than broad market shifts according to GF Data. PitchBook reports businesses with consistent earnings, strong margins, and scalable operations are continuing to command premium valuations, while companies with less predictable performance are transacting at lower multiples or requiring additional structuring. 

At a high level, valuation ranges across core industries in this segment are generally higher than those observed in smaller transactions, with indicative multiples as follows: 

• Manufacturing: 5.7x EBITDA 
• Construction: 5.6x EBITDA 
• Distribution: 5.9x EBITDA 
• Services: 5.9x EBITDA 

Buyer & Seller Conditions

Sam Scharich, Buy-Side Managing Director at Calder Capital, noted, “What we’re seeing in this segment is that deals are still getting done, but the due diligence process has become more demanding and time intensive. Buyers are taking more time to validate assumptions around margins and growth, and transactions that don’t clearly demonstrate consistency are either slowing down or requiring additional structure to close. The capital is there, but the burden of proof has shifted more heavily onto the seller, who must clearly demonstrate consistent financial performance and justify valuation expectations.” 

PitchBook notes that investors have become increasingly selective, with high-quality companies still able to access financing while lower-rated credits face more difficulty, reinforcing a more selective lending environment. 

“Despite all the attention surrounding artificial intelligence, we’re not seeing it materially influence valuations in most lower middle market transactions,” noted Logan Granger, Buy-Side Associate at Calder Capital. “Buyers remain focused on the fundamentals: recurring revenue, profitability, growth prospects, management strength, and earnings quality. AI may be part of the discussion, but it generally isn’t driving value on its own.” 

KeyBanc’s survey suggested that buyer demand was expected to be stronger than seller supply in Q1 2026, with 46% of business owners anticipating buy-side activity compared to only 19% anticipating sell-side activity. This data suggests that acquisition appetite is likely to lead seller supply early in the year. KeyBanc also noted that 35% of companies expected to sit out on M&A activity in Q1 2026. 

Deal Structure and Financing

In Q1, financing conditions strengthened, but the benefit was not evenly distributed across the segment: this environment continued to favor larger platform transactions, which were better positioned to secure financing and complete deals, while smaller deals and add-ons stayed comparatively flat in terms of valuation and pricing outcomes as reported by GF Data. 

This divergence in financing conditions and valuation outcomes is consistent with sponsor behavior observed by KeyBanc, which shows leveraged buyouts declining from 291 in Q1 2025 to 220 in Q1 2026, while approximately 76% of private-equity-backed acquisitions in Q1 2026 were add-ons. This indicates that, while sponsors remained active, deployment shifted toward expanding existing platforms rather than pursuing new platform investments. 

Cade Peterson, Buy-Side Associate at Calder Capital, stated, “When buyers have strong conviction in a business, they’re more willing to put additional cash forward at closing and move away from seller financing or earnouts. Buyers who write offers to include more cash at close are seeing accelerated timelines, and steering sales processes in their favor, as both sides can align more quickly around value when there’s less reliance on contingent elements like earnouts.” 

Economic Context

Q1 Evaluation

“While financing has become more accessible for certain deals, lenders and buyers are applying greater scrutiny to earnings consistency, margin stability, and overall risk. As a result, some transactions are moving forward more easily, while others are taking longer or requiring additional structure to close, such as earnouts, seller financing, or other contingent payments,” Hannah Nabhan, Buy-Side Director at Calder Capital, commented.  

At the same time, broader economic conditions continue to influence transaction dynamics. KeyBanc notes that ongoing macroeconomic and geopolitical uncertainty, along with a still‑elevated interest rate environment, are contributing to more selective buyer behavior, longer timelines, and stricter underwriting. 

Current Q2 Market Conditions

 “We are finding that buyers want to transact, and sellers are increasingly willing to engage, but the burden of proof has moved higher. The best companies will continue to get attention, especially in sectors where the work is physical, essential, recurring, or difficult to automate,” Parker Schaap, Buy-Side Director at Calder Capital noted. “But buyers are moving more carefully because they are underwriting not only today’s earnings, but the durability of those earnings in a world with higher rates, geopolitical shocks, and accelerating AI adoption. As a result, we expect deal timelines to remain extended and outcomes to become more concentrated among businesses that can clearly demonstrate consistent, resilient performance.” 

Heading into Q2 2026, we expect M&A activity to continue to subtly increase across the market. We believe the market will experience an increase in strong buyer demand, an improvement in seller supply, and slower execution. Buyers have capital and mandates, and we expect that their underwriting will become more extensive. 

Disclaimer

This Market Update is provided for informational purposes only and does not constitute legal, financial, investment, or other professional advice. The information contained herein is based on sources believed to be reliable; however, Calder Capital makes no representations or warranties, express or implied, as to the accuracy, completeness, or timeliness of the content. Market conditions are subject to change without notice, and past performance is not indicative of future results. Readers are advised to consult with their professional advisors before making any business or investment decisions. Calder Capital expressly disclaims any and all liability that may be based on the information contained in this report.

Q1 2026 Market Update:
Business Transactions
in the $25–100 Million Range

Introduction

This report examines M&A activity in the U.S. market for companies with enterprise values between $25-100M. It leverages Q1 2026 data from KeyBanc, PitchBook, GF Data, PE Hub, and internal insights from Calder Capital’s Sell-Side and Buy-Side teams. Companies in this range are typically mature, professionally managed, and appealing to both institutional investors and strategic acquirers. 

$25-50M

Market Activity and Sentiment

Deal Volume Trends

In Q1 2026, businesses in the $25–50 million range operated against a broader M&A backdrop in which announced transaction volume declined year over year while aggregate deal value increased. This broader market dynamic suggests that capital is increasingly concentrated in larger transactions rather than evenly distributed across the market. KeyBanc reported that U.S. announced M&A transaction volume fell 29.1% year over year, reinforcing a broader pattern of fewer deals and more concentration in larger transactions. 

Against this backdrop, sellers who are well prepared continue to attract buyer interest despite a more selective market.  Brian Eick, Sell-Side M&A Advisor at Calder Capital, stated, “For sellers, we are seeing that preparation matters more, earlier in the process. Buyers remain active, but they’re asking tougher questions earlier in the process.”  

Market Direction

Financing conditions improved in Q1, with debt availability increasing and average senior debt pricing on platform transactions falling to its lowest level since 2022. According to GF Data, these trends contributed to a more favorable financing environment for acquisitions, although underwriting standards continued to favor larger, lower-risk opportunities. Despite improving financing conditions and stronger buyer and seller confidence entering 2026, private equity market data indicates that completed deal volume remains relatively subdued, suggesting confidence has recovered more quickly than transaction activity. 

Valuatiopn Multiples

Within the $25–50 million segment, larger standalone businesses that could serve as platform investments generally remained better positioned to benefit from improving financing conditions, including lower borrowing costs and improved access to acquisition financing. Smaller or less differentiated businesses were less likely to experience the same advantages. 

Based on GF Data’s lower-middle-market transaction data, indicative valuation benchmarks for several core industries include: 

• Manufacturing: 6.3x EBITDA 
• Construction: 6.0x EBITDA 
• Distribution: 6.5x EBITDA 
• Business Services: 6.9x EBITDA 

 
Industry averages vary considerably, with sectors such as technology and healthcare generally commanding higher multiples than the core industries shown above.  

These valuation ranges are intended as directional benchmarks. Actual transaction multiples continue to vary based on industry, company performance, size, growth prospects, transaction structure, competitive buyer interest, and overall market conditions. 

Buyer & Seller Conditions

Buyer interest in the $25–50 million segment remained healthy during Q1 2026, particularly for businesses that demonstrated consistent earnings, strong financial reporting, and manageable risk. These companies generally progressed through the sale process more efficiently and attracted greater buyer competition, while businesses with less transparent financial performance often experienced fewer qualified buyers and longer diligence timelines. 

Both financial and strategic buyers remained active, focusing their efforts on opportunities that aligned with their investment criteria and long-term strategic objectives. 

Sam Scharich, Buy-Side Managing Director at Calder Capital, commented, “While AI continues to generate attention, buyers remain far more focused on earnings quality, operational consistency, and overall risk than on AI capabilities alone.” 

Jim Oren, Buy-Side M&A Advisor at Calder Capital, added, “Buyers are asking more detailed questions earlier in the process and are quicker to disengage when a company cannot clearly support its earnings quality, margin stability, or growth story.”

Deal Structure and Financing

Deal structures in this segment continued to favor certainty around price and closing. Where possible, buyers sought transactions with clear economics and limited reliance on contingent consideration, such as earnouts, seller financing, or other performance-based payments. Flexible structures remained common when needed, particularly in transactions where future performance or valuation carried greater uncertainty. 

This preference for execution certainty was reflected more broadly across the M&A market. PitchBook reported that North American dealmakers “raced to close” transactions amid geopolitical and interest-rate uncertainty, resulting in 5,539 completed transactions totaling a record $1.02 trillion in announced deal value during Q1 2026. 

At the same time, improving financing conditions did not lead to more aggressive dealmaking. Private equity activity remained disciplined in Q1 2026, with leveraged buyout volume declining year over year and sponsors continuing to prioritize add-on acquisitions over new platform investments. This suggests financial sponsors remained active, but were generally more focused on expanding existing portfolio companies than on pursuing new standalone platforms. 

Economic Context

Q1 Evaluation

In Q1 2026,  KeyBanc reported that the median EV/EBITDA multiple for transactions under $100 million in enterprise value declined 0.9% year over year. At the same time, aggregate deal value increased, although transaction activity remained focused on a relatively small number of larger transactions. PitchBook similarly observed that “high-quality companies can still get financing, while lower-rated credits may need to wait out the storm,” noting that multiple expansion remains “concentrated, not widespread,” as buyers continue to pay premiums for scale and market leadership rather than across the broader market. 

Current Q2 Market Conditions

Looking ahead to Q2, activity in the $25–50 million segment is expected to remain selective, with well-positioned businesses continuing to attract the strongest buyer interest. Buyers are likely to prioritize companies that demonstrate stable earnings, resilient margins, and lower underwriting risk amid ongoing geopolitical and macroeconomic uncertainty. 

$50-100M

Market Activity and Sentiment

Deal Volume Trends

In Q1 2026, businesses in the $50–100 million enterprise value segment operated within a broader M&A market where headline transaction value was strong, but activity remained concentrated among larger, higher-quality opportunities. PitchBook reported record North American M&A transaction value during the quarter, but noted that several massive transactions disproportionately influenced the headline figures. As PitchBook observed, some dealmakers “raced to close” amid geopolitical and interest-rate uncertainty; however, this broader activity does not necessarily indicate a broad-based increase in volume across the $50–100 million segment. For companies in this range, the more relevant takeaway is that buyers remained active but selective, prioritizing scale, financial visibility, and execution certainty. 

Market Direction

Financing conditions improved during Q1 for larger platform transactions, supported by increased debt availability and active private credit markets. Private credit providers often offered greater flexibility, faster underwriting, and more customized financing structures than traditional bank lenders. Even so, capital providers remained selective, with underwriting generally favoring businesses that demonstrated strong financial performance, predictable cash flow, and lower perceived risk. 

The $50–100 million enterprise value segment operates with a different buyer base and capital structure than much of the broader lower middle market. Transactions in this range are more likely to attract institutional investors, larger private equity sponsors, and private credit providers, resulting in greater access to capital, more sophisticated reporting expectations, and increased focus on scalable growth opportunities. Accordingly, company-specific fundamentals, particularly scale, financial visibility, and execution readiness, often play a larger role in buyer decision-making than broader market conditions (KeyBanc). 

Valuation Multiples

GF Data reported that valuation gains during Q1 2026 were concentrated among larger platform acquisitions, while pricing for smaller platform transactions and add-on acquisitions remained comparatively flat. 

This trend is particularly relevant within the $50–100 million enterprise value segment, where larger platform opportunities generally attract stronger buyer competition and are more likely to command premium valuations. Improving financing conditions continue to support transaction activity, but valuations are increasingly driven by company-specific factors such as scale, financial visibility, operational quality, and the ability to satisfy institutional underwriting standards (GF Data). 

Based on GF Data’s lower-middle-market transaction data, indicative valuation benchmarks for several core industries in this size range include: 

• Manufacturing: 7.3x EBITDA 
• Construction: 7.0x EBITDA 
• Distribution: 7.5x EBITDA 
• Business Services: 8.1x EBITDA 

These valuation ranges are intended as directional benchmarks. Actual transaction multiples continue to vary based on industry, company performance, size, growth prospects, transaction structure, competitive buyer interest, and prevailing market conditions. 

Buyer & Seller Conditions

Buyer activity in the $50–100M segment continued to favor platform opportunities with sufficient scale, consistent financial performance, and clear visibility into future growth. These businesses generally attracted broader buyer participation, more competitive bidding, and stronger valuations, while companies with less scale or financial visibility often experienced fewer qualified buyers and longer sale processes. 

Garrett Monroe, Sell-Side Managing Director, stated, “Buyers are moving quickly when a business can clearly demonstrate its financial performance, growth outlook, and reporting quality, but they’re slowing down much earlier when those elements are harder to underwrite.” 

Seller sentiment also continues to strengthen as more business owners who previously delayed a sale return to the market. Max Friar, Founder and Managing Partner of Calder Capital, noted, “At a certain point, you can only put off these sales decisions for so long. We’re seeing more owners who have been waiting to come to market, and they’re being met by a very robust, well-capitalized buyer pool.” 

Deal Structure and Financing

Deal structures in this range continued to favor certainty around price and closing, with many buyers preferring transactions that could be completed with clear terms and limited reliance on contingent consideration, such as earnouts, seller financing, or other performance-based payments. Flexible structures remained common where appropriate, particularly in transactions with greater uncertainty around future performance or valuation. 

This preference for execution certainty was reflected more broadly across the M&A market. PitchBook noted that high-quality companies continued to access financing more readily than lower-rated credits, reinforcing a market where stronger businesses were better positioned to move through diligence and secure buyer support.  

Within the $50–100 million enterprise value segment, improving financing conditions appeared most relevant for businesses with the scale, reporting quality, and earnings visibility needed to support platform-level investment. Rather than signaling more aggressive dealmaking across the board, the market continued to reward companies that could give buyers and lenders confidence around cash flow durability, growth prospects, and execution risk. 

Economic Context

Q1 Evaluation

The $50–100M segment operated in a market where larger transactions continued to drive overall valuation performance, consistent with broader trends identified by PitchBook. High-quality businesses with strong financial performance and clear growth opportunities continued to attract the greatest buyer interest. 

As Friar noted, “buyers are intensely scrutinizing sellers right now… they want to make sure what they’re investing is something they feel they can grow without worry.”

Current Q2 Market Conditions

KeyBanc’s Middle Market Sentiment Survey, which surveyed owners and senior executives of companies with $10 million to $1 billion in annual revenue, found that anticipated buy-side activity exceeded anticipated sell-side activity heading into 2026. While this data is not specific to the $50–100 million enterprise value segment, it supports a broader market view that buyer interest may continue to outpace the supply of businesses coming to market in the near term. 

Accordingly, well-positioned businesses are expected to continue attract strong buyer interest, while companies with less consistent financial performance may experience longer sale timelines, increased diligence, and greater sensitivity around valuation expectations. 

Disclaimer

This Market Update is provided for informational purposes only and does not constitute legal, financial, investment, or other professional advice. The information contained herein is based on sources believed to be reliable; however, Calder Capital makes no representations or warranties, express or implied, as to the accuracy, completeness, or timeliness of the content. Market conditions are subject to change without notice, and past performance is not indicative of future results. Readers are advised to consult with their professional advisors before making any business or investment decisions. Calder Capital expressly disclaims any and all liability that may be based on the information contained in this report.