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Frequently Asked Questions
What is the lower middle market in M&A?
The lower middle market in M&A typically refers to businesses with enterprise values between $10 million and $50 million, or annual revenues between $5 million and $100 million. These companies are too large for main street brokers but too small for major investment banks.
What are the biggest trends in lower middle market M&A?
Key trends include increased use of AI for deal sourcing and research, growing interest from private equity in the segment, rising importance of technology-enabled services businesses, and more sophisticated data-driven approaches to identifying and qualifying acquisition targets.
How do lower middle market deals differ from SMB deals?
Lower middle market deals typically involve more complex deal structures, longer due diligence periods, institutional buyers, management teams that stay post-acquisition, and valuations based on EBITDA multiples rather than SDE. They also require more sophisticated marketing and buyer qualification processes.
