2026 M&A outlook: Is this finally the year the dam breaks?

Scott Bushkie

Guest Columnist

January 12, 2026

After nearly three years of recalibration, hesitation and waiting for clarity, the lower middle market enters 2026 with something it has been missing for a while: momentum.

I don’t say that lightly.

After more than 27 years advising business owners, I’ve learned to be cautious with words like “surge” or “boom.”

But this year feels different, not just in the data, but in conversations with sellers, buyers, lenders and fellow advisors across the country.

Getting past the election

The slowdown that defined much of 2023, 2024 and even the first half of 2025 was less about a lack of demand and more about uncertainty.

Inflation, interest rates, supply-chain disruptions and a deeply polarizing U.S. election caused many business owners to pause.

In the months leading up to the 2024 presidential election, sellers simply stopped moving.

Deal volume fell not because buyers disappeared, but because sellers went firmly into wait-and-see mode.

Today, that cloud has lifted.

The election is behind us, interest rates are trending downward and tariffs, while still part of the equation, have become something of a known variable rather than a paralyzing one.

Uncertainty hasn’t vanished, but it no longer dominates decision-making.

Dry powder and pent-up demand

On the buyer side, the market has rarely looked stronger.

Capital continued to accumulate throughout the slowdown, and buyers can only sit on the sidelines for so long.

Private equity firms, family offices and strategic acquirers are now under real pressure to deploy capital and generate returns.

We see this clearly at Cornerstone.

Historically, our clients received four to five offers on average.

In 2024, that jumped to 10 offers per client.

In 2025, it held steady at around nine.

Buyer competition is not only real, but it’s intensifying.

That demand is coming from several directions.

Strategic buyers are turning to add-on acquisitions because organic growth has become harder. 

International buyers are responding to tariffs and supply-chain realities by acquiring U.S.-based businesses.

Private equity continues to expand in scale and urgency.

All of this capital is chasing a limited number of high-quality, lower middle market companies, pushing outcomes in sellers’ favor.

The Silver Tsunami is arriving

By 2030, all Baby Boomers will be 65 or older – which means the long-anticipated wave of Baby Boomer exits is no longer theoretical.

In a national study we released in early 2025, 48% of business owners, aged 45-75 years old, said they wanted to sell within three years.

We are already one year into that timeline, and we’re seeing the impact firsthand.

As we head into 2026, we are going to market with nearly double the number of clients compared to this time last year.

Inbound calls from owners who have never formally explored a sale before are continuing to increase.

Private equity shifts down market

Another important shift is unfolding within private equity.

Over the past several years, many firms held portfolio companies longer than planned as exit conditions failed to support required returns.

Rather than force sales, firms focused on integration, operational improvement and add-on acquisitions.

We believe add-on acquisitions will continue to be very strong for the lower middle market M&A in 2026.

Uptick in unsolicited offers

As buyer competition increases, business owners should also expect more unsolicited outreach.

Though flattering, these conversations are risky for sellers who may inadvertently lock themselves into one-on-one negotiations, reveal sensitive information or settle for a price that’s far below market.

As another advisor put it, “A lot of these unsolicited offers are not worth the paper they are printed on.”

Looking ahead

As we look ahead, several forces are coming together at the same time.

Interest rates are lower, buyer demand is strong, more owners are coming to market and there is a large amount of capital that needs to be put to work.

Together, these conditions point to a very active year ahead in the lower middle market.

For business owners considering an exit within the next five years, now is the time to prepare. 

It’s not because you need to sell tomorrow, but because the best outcomes tend to go to owners who are ready when opportunity shows up.