Private equity firms continued shifting acquisition focus toward lower middle market and small business targets in early 2026, as competition for larger platform companies kept multiples elevated. CGK Business Sales reported that buyers in the $1 million to $10 million enterprise value range included a growing proportion of PE-backed search funds and family offices alongside traditional individual buyers.
The trend reflects broader M&A market dynamics where deal flow shifted as interest rate stabilization made financing smaller acquisitions more attractive relative to larger leveraged buyouts. Sellers in this segment are seeing stronger buyer engagement, with deal timelines shortening compared to 2024 and 2025.
Business brokers noted that quality-of-earnings scrutiny has intensified even in smaller deals, as buyers apply institutional diligence standards previously reserved for larger transactions. Sellers who prepare detailed financial documentation in advance are closing faster and achieving better terms.