Selling a Business: The State of the Market
9 February 2026: Selling a Business: The State of the Market
At about this point every year, we’ve opined on the state – current and projected – of the “business-for-sale” market and we’ve seen no reason to suggest we should alter that routine this year.
This time last year saw a new administration rolling into Washington, DC, and we expected some BIG changes. We certainly got some. This year, though we’re able to comment on the current state and immediate future, there’s a bit more turmoil in the world at the moment to give much more than an educated guess about anything beyond six months or so. But that said, let’s dive in.
Buyers
Depending on where in the market hierarchy a particular business lives, the type of buyer for that business will fall into one of the following categories:
1. Traditional strategic buyers: Companies acquiring competitors or entering new markets.
2. Private equity firms: With dry powder available, PE is increasingly active — especially for revenue-stable or tech-enabled smaller companies with clear growth potential.
3. Search funds: These are increasingly pursuing Main Street businesses with predictable cash flows.
4. First-time acquirers: Individual entrepreneurs and small buyer groups.
We work in the Main Street and Lower Middle Markets – businesses with valuations of roughly between US$300,000 and $25 million. First time buyers are heavily represented in the lower end of our market; businesses with less than about US$2 million in revenue. But smaller strategic buyers are also present, especially in the residential services and non-clinical healthcare sectors.
Over the past couple of years, we’ve seen a significant increase in private equity and search firm activity which has been manifested in two ways: 1) more such firms have been formed and many of these new firms are small, and 2) because they’re new and small, we’ve seen minimum requirements get lower.
A short perusal of the “Businesses We’re Looking For…” section of The Brokers Roundtable, illustrates that such firms are considering much smaller businesses than PE would look at in the past. Companies with EBITDA as low as $250k -$300K are now being courted – provided they’re in the right sectors and particularly those with recurring revenue.
What’s Impacting the Market
Credit availability is a major driver. A recent Federal Reserve survey found U.S. banks expect stronger loan demand in 2026, particularly for business credit — the highest since mid-2022 for medium and large firms. While small business loan demand is flatter, banks do not appear to be tightening standards further and may even ease conditions as rate cuts materialize.
Interest rates and macro conditions remain key. If the Federal Reserve continues to lower rates gradually, borrowing costs for acquisitions (including SBA-backed loans) could become more attractive, further supporting deal flow.
Valuation expectations between buyers and sellers remain a point of contention. Small business owners are notorious for having an exaggerated opinion of their business’ value. This, in fact, is the major reason that 80% of business in our market sector don’t sell.
- Sellers who price their business based on what they want – often without knowing what their business is worth – will often be disappointed.
- More and more businesses are projected to come to market over the next decade as Baby Boomers head for the exits. This represents greater competition with other businesses – and more choice for buyers.
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Sellers who price their business based on historic pandemic peaks will find buyers unwilling to pay the same multiples if revenue has stabilized or declined.
At the same time, private equity and strategic buyers are often willing to pay premium multiples for certain revenue-stable, tech-enabled, or recurring-revenue businesses, especially where operational improvements and digital transformation can drive growth.
Technology and Strategic Shifts. Buyers of smaller businesses increasingly look for tech-savvy targets that can scale (e.g., SaaS, digital services). Businesses that have adopted technology (automation, CRM, online distribution) often command higher valuations.
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We offer a comprehensive coaching program – both group coaching in The Brokers’ Roundtable℠, our online support community, as well as one-on-one coaching – tailored to Realtors, business owners, buyers and anyone interested in valuing, buying or selling a business.
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Challenges Facing Sellers
Valuation Gaps and Preparedness. Sellers often overestimate their business’s worth. Bridging the valuation gap is a recurring challenge. Also, many sellers are not adequately prepared with organized financials and documentation, slowing deal timelines. Both of these issues are recurring topics for this blog and our recently-launched YouTube channel. (This video on planning and preparation is particularly pertinent.)
Profitability Issues. Multiple brokers report an increasing number of inquiries from business owners whose companies are unprofitable or marginally profitable. (Part 2 of the unprofitable discussion is here.) As you might imagine, selling one, while not impossible, is challenging.
Buyer confidence can be weak. This is especially true for businesses that:
- Depend heavily on owner involvement
- Have weak competitive moats
- Lack recurring revenue
- Suffer from customer concentration.
Regulatory and Market Headwinds. Certain sectors face regulation and compliance cost increases (e.g., healthcare, education, care homes), which can complicate exits and lengthen due diligence timelines.
In the U.S., there’s an election coming up this year that could seriously impact regulatory burdens and capital gains taxes, both of which will negatively effect valuations.
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Our course, “Learn How to Value and SUCCESSFULLY Sell Businesses“, teaches you how to accurately value and successfully sell businesses.
Outlook: Next 12–18 Months
Moderate Growth in Deal Volume and Value. Experts suggest that M&A volumes will continue to grow modestly in 2026. Private equity deal volume is anticipated to increase around 5%, while strategic deal volume may expand ~3%.
For the small business space, buyers remain active but are diving deeper during due diligence. The result is that deals are taking a little longer to close. We see more scrutiny on financials. Buyers want to be sure of the financial state of their target. We’re seeing more buyers wanting “quality of earnings” reports. Lenders’ focus on diligence is heightened as well.
Not surprisingly, sellers who price realistically and prepare thoroughly are likely to find buyers more quickly.
Strategic and Sector Tailwinds. The growing emphasis on digital transformation, tech adoption, and automation will likely shape acquisition strategies. Businesses with scalable digital revenue, recurring models, or technology integrations will command a market premium in valuations.
Additionally, businesses without an “owner concentration” problem – those that don’t hinge on a single owner – will be especially attractive to buyers.
Check out our series The 6 Essential Elements of Selling a Business Successfully (starting 2 February ’26) on our YouTube channel.
Risks & Headwinds
- Economic Uncertainty: Slower GDP growth and potential policy shifts could temper deal enthusiasm in the second half of 2026.
- Cost Pressures: Inflation-related cost increases continue to squeeze margins and can delay seller exits until profitability stabilizes.
- Valuation Gaps: If sellers expect valuations based on historic highs rather than realistic forecasts, deals may stall.
- Bank Lending Cycles: While banks are currently confident about loan demand, any tightening or shocks could slow transaction velocity — especially for leveraged deals.
- The Silver Tsunami: The U.S. Census Bureau’s recently-issued report about the number of businesses projected to come to market over the next decade.
Takeaways for Sellers
Prepare early: Organized financials, documented processes, and clarity on growth potential shorten due diligence timelines.
Focus on core strengths: Buyers are willing to pay for businesses with operational leverage, scalable channels, and clean margins.
Look beyond price: Synergies, technology adoption, and management transition plans often matter more than headline multiples.
Manage expectations: Align pricing with realistic multiples backed by industry comparables.
Boost attractiveness: Strengthen recurring revenue, document systems, and reduce owner dependence.
Capitalize on demand: With buyer interest increasing, well-prepared sellers can often negotiate faster closings.
The Bottom Line
While economic headwinds and cost pressures remain, strong buyer interest, favorable credit conditions, and strategic deal-making trends indicate that activity is likely to remain healthy over the next 12–18 months. Tailwinds from digital transformation and a strong appetite among private equity and strategic buyers should help sustain both the volume and value of transactions — benefiting those sellers who position their businesses effectively, have reasonable price expectations and properly prepared their business – and themselves.
Overall, the outlook is cautiously optimistic: growth ahead, but shaped by shifting valuations, sector differences, and the Silver Tsunami.
I’d like to hear from you. What topics would you like me to cover? How can we tailor these posts to be more useful to you and your business. Let me know in the comments box, below, or email me at jo*@*******************og.com.
Check out our video series, “How Much is My Business Worth“on our YouTube channel.
“I owe my success to having listened respectfully to the very best advice, and then going away and doing the exact opposite.”
–G.K. Chesterton
If you have any questions or comments on this topic – or any topic related to business – I’d like to hear from you. Put them in the comments box below. Start the conversation and I’ll get back to you with answers or my own comments. If I get enough on one topic, I’ll address them in a future post or podcast.
I’ll be back with you again next Monday. In the meantime, I hope you have a safe and profitable week.
Joe
Searching For…
A NOTE TO READERS: Our “Searching For…” feature has been moved to our online support platform, The Brokers Roundtable℠. It will appear there exclusively.
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The author is the founder, in 2001, of Worldwide Business Brokers and holds a certification from the International Business Brokers Association (IBBA) as a Certified Business Intermediary (CBI) of which there are fewer than 600 in the world. He can be reached at jo*@*******************og.com
