Who’s Buying Businesses in 2026? What the Latest Axial Data Reveals for Small Business Owners

If you’re a business owner thinking about selling in the near future, there’s an important question that you should be asking:

Who is actually buying businesses like yours in 2026?

The latest data from the report "Who’s Buying in the Lower Middle Market in 2026? Key Buyer Trends From Axial Data" reveals a buyer landscape that is bigger, more diverse, and more competitive than at any point in the past five years.

It also reveals who is closing deals, what they’re targeting, and where competition is heating up.

Let’s break down what it means for you as a small business owner.

The Buyer Universe Is Expanding Rapidly

In 2025, 2,635 new buyers joined Axial which is a 36% year-over-year increase and the highest number of new buyers in the platform’s history.

Translation for owners: Buyers and capital are readily available for transactions. So if you’re looking to sell your business, you want to ensure that your business aligns with buyers’ acquisition criteria.

The $1M–$5M EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) Sweet Spot Is Crowded

Across all buyer types, including Private Equity, Independent Sponsors, Family Offices, Holding Companies, Corporations, Search Funds, and Individual Investors, the overwhelming majority are targeting businesses that have:

🎯 $1M–$3M EBITDA (peak demand)

🎯 $3M–$5M EBITDA (very strong demand)

However, interest remains solid for businesses with $500K–$1M EBITDA and $5M–$10M EBITDA.

Demand tapers noticeably above $10M EBITDA.

What this means: If your business generates between $1M and $5M in EBITDA, you are sitting in the most competitive segment of the lower middle market.

That’s good news, but don’t forget that:

• Buyers are selective
• Quality matters
• Differentiation drives business value

It’s No Longer Just Private Equity

Five years ago, the market was dominated by Private Equity funds and Independent Sponsors.

In 2021, PE and Independent Sponsors were responsible for 61% of closed deals but by 2025 that dropped to 45%.

Who filled the gap?

• Search Funds: 14% of deals (all-time high)
• Individual Investors: 13%
• Family Offices: 15%
• Holding Companies: 10%

The buyer pool is now far more diversified.

Why this matters for SMB owners:

Different buyers have different priorities:

You now have more potential paths, not just the PE exit lane.

Sector Competition Is Uneven

Axial’s data highlights where buyer demand is at odds and even with deal supply.

Strong Alignment (High Demand + High Deal Flow)

• Industrials (#1 in both)
• Consumer Goods (#3 in both)

High Competition (Demand > Supply)

• Business Services (#2 investor interest, #6 deal activity)

Lower Enthusiasm (Supply > Demand)

• Food & Hospitality (#2 deal activity, #7 investor interest)

Why this matters:

If you’re in Business Services, expect:

• Competitive bidding
• Faster timelines
• Sophisticated buyers

If you’re in a sector with softer enthusiasm, positioning and preparation matter even more.

Deal Sizes Are Shifting

Average selling prices tell an interesting story:

• PE deal sizes have come down in 2025 — partly due to more add-on acquisitions
• Holding Companies posted the highest average selling price in 2025
• Search Funds and Individual Investors are buying larger businesses than in prior years

What’s driving this?

• Easing interest rates
• Improved lender confidence
• More sophisticated capital structures
• Growing access to debt for non-PE buyers

Bottom line: Buyers outside traditional PE now have real firepower.

Add-On Acquisitions Are a Major Force

Approximately 50% of add-on demand on Axial come from PE Funds.

That means many PE firms are:

• Acquiring smaller companies,
• Integrating them into existing platforms, and
• Building scale through these “tuck-ins.”

For small business owners, this creates two distinct paths:

1. Strive to be a platform company if you are large enough or
2. position yourself as a strategic add-on

Each has different valuation dynamics and negotiation leverage.

What This Means for You as a Small Business Owner

Here are the key takeaways:

• There is more capital than ever: The buyer universe is deeper and more diverse.
• The $1M–$5M EBITDA range is highly competitive: If you’re in this band, preparation equals leverage.
• You have more exit pathways: It’s no longer “just private equity.”
• Competition among buyers doesn’t guarantee a premium: Quality businesses drive bidding wars. Average ones get filtered out.
• Sector dynamics matter: Buyer appetite is not evenly distributed across all industries.

Strategic Questions to Ask Now

If you’re thinking about selling, this is the time to ask:

• Should we position our business as a platform or an add-on opportunity for buyers?
• Is our EBITDA clean, defensible, and transferable?
• Do we have recurring revenue?
• Is management in place so the business operates without me?
• Would multiple buyer types find our business attractive?

The lower middle market in 2026 is active — but buyers are disciplined.

The window is open. But it favors the prepared.

Plan Your Exit. Design What Comes Next.

At Business Transition Academy, we help owners prepare not just their businesses—but themselves—for what’s next.

A great exit doesn’t end at the closing table. Our Business Owner resource “Live Your Ideal Life After Selling Your Business” and free book “Sell Your Business: At the Right Time, for the Right Price, and to the Right Buyer” will help you prepare for the sale and intentionally design the life that follows—so you exit on your terms, without regret.