Heading into 2026, business owners are well-positioned to pursue an exit, as narrowing valuation gaps create a more favorable selling environment.
After nearly two years of adjustment driven by higher interest rates, cautious lenders, and buyer-seller misalignment, the lower middle market is finding its footing again. As 2025 winds down, deal activity is not only returning, but it’s becoming more robust, particularly for high-quality businesses that are prepared to go to market.
According to S&P Global Market Intelligence, M&A activity has stabilized following the post-2021 slowdown, with strategic buyers playing a growing role in overall deal volume even as mega-deal activity remains uneven.
At the same time, buyers are regaining confidence amid more predictable financing conditions. The result is a healthier market and a meaningful exit opportunity for owners who position themselves early for a sale in 2026.
What’s Driving Momentum Into 2026?
Financing Conditions Are Stabilizing
Interest rates remain elevated compared to historic lows, but volatility has eased. Federal Reserve guidance indicates policy rates have entered a more stable phase, with potential cuts expected in 2026 if inflation continues to moderate.
Private Equity Is Disciplined — but Well Capitalized
Private equity buyers remain selective, but they are far from sidelined. PitchBook estimates global private equity dry powder at approximately $1.5 trillion, providing significant capacity to pursue new investments as market conditions improve.
That capital is being deployed carefully. Buyers are prioritizing businesses with strong margins, consistent cash flow, professionalized financial reporting, and clear, executable growth levers. In today’s market, quality assets don’t just transact — they attract competitive interest and stronger outcomes.
Strategic Buyers Lead the Recovery
Strategic buyers are increasingly driving deal activity. Less sensitive to financing constraints, corporate buyers are motivated by consolidation, supply-chain resilience, and long-term growth initiatives. Many are deploying balance-sheet strength built during the prior cycle.
According to Deloitte’s M&A Trends analysis, strategic buyers are focusing on bolt-on acquisitions in sectors such as industrials, healthcare services, technology, energy, and food & beverage — areas where operational scale and integration capabilities create value.
For business owners, having strategic buyers in the mix often means a quicker sales process, fewer financing-related obstacles, and the potential for higher sale prices when your business aligns well with a buyer’s needs.
What Business Owners Should Be Doing Now
While the market is improving, it remains highly selective. Buyers are conducting deeper diligence and moving quickly past unprepared sellers. PwC’s Deals and Due Diligence insights emphasize that financial quality, operational resilience, and risk management are now baseline expectations in successful transactions.
Businesses that command the strongest exit outcomes typically enter a sale process with normalized financials, reduced customer concentration, a capable second-layer management team, and completed sell-side diligence.
Why Timing Matters
While market conditions may continue improving into 2027, competition among sellers is likely to increase as confidence returns. Historically, the most attractive exit windows favor owners who move before supply accelerates.
For business owners considering a sale, 2026 offers a compelling balance: improving conditions, motivated buyers, and still-disciplined deal volume.
ACT Capital Advisors works with business owners to clarify their options, prepare thoughtfully, and execute transactions that maximize value while protecting the legacy they’ve built. With deep industry experience and a hands-on, owner-focused approach, our team helps clients move from preparation to exit with confidence.
Contact ACT Capital Advisors today to assess your readiness and start positioning your business for a successful 2026 exit.
