What Business Owners Should Expect from the 2026 M&A Market

After two choppy years for dealmakers, 2026 is starting with a very different tone, one that many business owners have been waiting for. While the past few years brought tariff swings, interest‑rate volatility and a cautious lending environment, the fundamentals are shifting in a way that increasingly favors sellers, especially those in the lower-middle-market (LMM).

The year 2025 was marked by stops and starts. LMM deal volume fell by roughly 27% through the third quarter, as owners and buyers hesitated amid policy uncertainty and an uneven economic backdrop. Even so, valuations held steady at about 5 to 7 times EBITDA, with the higher end achieved by larger, more mature companies and the lower end more typical for smaller or less developed firms. In short, the companies that did reach the market were still commanding healthy, quality‑dependent pricing.

By the end of 2025, the picture had improved. Analysts described the period as a “reset” rather than a downturn, with buyers and lenders adjusting to a new normal of higher but steadier borrowing costs. As 2026 arrived, several indicators began lining up in favor of sellers. Interest rate cuts reduced financing burdens, strengthened deal pipelines, and both strategic buyers and Private Equity (PE) firms signaled a greater willingness to engage. Sentiment in the LMM entering 2026 was noticeably stronger, supported by stabilizing capital markets and more predictable economic conditions. However, the clearer outlook still carries policy risk. The recent Supreme Court decision overturning the administration 2025 tariff actions has introduced fresh uncertainty as new tariffs may now be pursued under different trade authorities.

Survey data also reflect 2026 improving sentiment. National polling of corporate and PE dealmakers shows that only 48% of PE leaders felt confident in dealmaking at the beginning of 2025, but that number surged to 86% by year‑end, the highest reading in six years. These surveys also indicate that most sponsors plan to initiate transactions in the first half of 2026, driven by pressure to return capital to investors and by the opportunity to capitalize on firmer valuations and clearer economic conditions.

Another reason for optimism: PE has a lot of money to put to work. U.S. estimates indicate that PE firms are now sitting on $1.1 trillion to as much as $3.2 trillion in dry powder. This buildup stems from several years in which firms pursued smaller add‑on acquisitions while avoiding larger platform deals that would have absorbed more capital, leaving a substantial amount still waiting to be deployed. Funds now face pressure from their own investors to deploy that capital, and many are looking directly at lower‑middle‑market companies, the same size range that comprises much of New Hampshire’s privately held business landscape.

But a surge in activity does not mean buyers are any less selective. The playbook for 2026 puts much more weight on business fundamentals. PE firms are particularly focused on companies with stable cash flow, recurring revenue, and the ability to build operational efficiencies after the acquisition. They are also underwriting deals more carefully than they did during the 2021 boom, when cheap debt made almost any transaction viable. That discipline is not going away, if anything, it is becoming the norm.

Still, stability in valuations is encouraging. Even with softer volumes in 2025, pricing held firm, supported by competition for high‑quality assets and a limited supply of strong companies coming to market. Key sectors are drawing especially strong interest: business services with subscription or contract revenue, industrial and manufacturing firms tied to supply‑chain resilience, healthcare services, infrastructure‑related businesses, and software‑enabled operations across multiple industries. These areas reflect national investment themes, including reshoring and the continued buildout of data and energy infrastructure, and companies operating in them may find particularly strong demand.

For owners considering a sale, the bigger question is not whether 2026 is active, it is whether their company is ready. Today’s buyers expect much more preparation on the front end. Clean, GAAP‑aligned financials are essential, and most buyers want to see a thoughtful, well-supported normalization of earnings. They are also paying closer attention to customer concentration, pricing power, and operational systems. In the last two years, underwriting became more rigorous, and that is a trend likely to continue even as deal activity picks up.

Operational maturity, along with the resilience and turnkey qualities that come from a business running smoothly without heavy owner involvement, matters as much as financial clarity. Businesses that rely heavily on the owner day-to-day may still find a buyer, but they will not attract the same level of interest or pricing. Having a strong second‑level management team, documented processes and the ability to operate without direct owner oversight goes a long way in today’s market. And for many companies, simply organizing contracts, tax records, HR policies and compliance materials into a well-structured data room can eliminate weeks of friction during diligence.

Timing is another factor to consider. Many founders delayed exits between 2022 and 2025, and there is now a larger group of owners eyeing a transition in the 2026–2028 window. As more companies make their way to market, buyers will have choices. Those who invest in early preparation tend to stand out, and often close faster with fewer concessions.

For business owners, the message is straightforward: conditions appear more favorable than they have been in years, but preparation is still the differentiator. This is not the exuberant, stimulus‑driven M&A market of 2021, and it is not the stop‑and‑go environment of 2024 and early 2025 either. It is a more balanced, more disciplined landscape. One where well‑run companies with clear financials, stable performance, and a proactive transition plan are likely to see strong buyer interest.

If selling is on your horizon within the next one to three years, now is the time to get your house in order. An early assessment of financial quality, operational gaps and leadership readiness can make the difference between a smooth process and a stalled one, and between an average valuation and a premium one.