Q4 2025 Small Business M&A Market Report: Trends & Insights

The Deal Market Is Still Moving - And It’s Moving Fast

This past quarter was one of the busiest we’ve seen all year. BizBuySell reported 2,599 closed transactions in Q3 - up 8% from last year and 11% from Q2. That tells me sellers aren’t waiting around for the Fed or the news to settle down - they’re choosing to sell now.

Axial also reported 3,320 new deals came to market, with Healthcare, Business Services, Industrials, and Tech leading the way. That’s the second-highest deal volume ever.

What I’m seeing on the ground:

  • Buyer appetite is strong, with more quality buyers than ever before.

  • Well-priced deals with clean books are getting attention fast — sometimes within hours, often within days. Multiple LOIs often come in within weeks.

Valuations: Still Solid, Especially for Well-Run Companies

Multiples are holding up better than many expected. According to the IBBA Market Pulse:

  • Main Street deals ($1M–$2M SDE): 3.3x to 4.0x multiples.

  • Lower Middle Market ($2M–$50M EBITDA): 5.3x to 6.5x — the highest in a decade.

Buyers today are metrics-driven and well-informed. Sellers are more realistic. Clean financials and recurring revenue continue to separate the top-tier listings from the rest.

Deals Are Closing Faster

Median days on market have dropped to 149, according to BizBuySell - the lowest since 2017.

From what I’m seeing every week: if a business is priced right and has clean books, serious buyers jump quickly. Many show up with LOIs in hand.

Why the speed?

  • There are more serious buyers than quality listings.

  • Sellers are pricing more realistically, which keeps momentum strong.

Hot and Cold Industry Trends

Sectors with strong demand:

  • Healthcare (+27% on Axial) -  recurring and essential services are in high demand.

  • Residential & Commercial Services - still among the most sought-after categories.

  • Retail and Restaurants surprised the market with strong quarterly gains.

If you operate a service-based business with reliable cash flow, this is your moment.

Sectors facing challenges:

  • Manufacturing saw deals drop 11%, and median sale prices fall 37%. Tariffs, cost volatility, and supply chain issues are the big drivers.

  • Consumer Goods and Hospitality had more listings, but lower buyer interest - suggesting a gap between seller expectations and market demand.

Buyer Sentiment: Still Strong

BizBuySell reports that 77% of buyers feel confident they can find a good deal right now.

I’m also seeing:

  • A steady stream of “corporate refugees” - people leaving jobs or facing layoffs (thanks to AI or economic tightening) are moving into small business ownership.

  • Buyers are prepared, informed, and metrics-focused — they know what multiples make sense.

  • There are still more qualified buyers than quality listings — and that’s not changing anytime soon.

Seller Sentiment: More Realistic, More Motivated

Baby Boomers still make up the majority of sellers - 59%, according to IBBA - and most are selling for retirement.

What’s different now is:

  • Sellers are more prepared and more open to fair offers.

  • They’re not waiting for the "perfect" time to sell.

  • They understand reasonable pricing and cash flow multiples.

This shift in mindset is helping more deals get across the finish line.

Looking Ahead to 2026

The Fed is signaling possible rate cuts in 2026. Lower interest rates typically bring more buyers into the market - especially SBA-backed buyers.

Combine that with the ongoing wave of corporate layoffs and fewer job opportunities for white-collar professionals, and you get more buyers actively looking to acquire businesses. That demand could push up valuations.

"Boring" businesses in recession-resistant industries - like home services -  remain in high demand.

Here’s My Take:

  • Early 2026 should be very active.

  • There will be more qualified buyers than sellers. A tough job market will drive even more buyers to business ownership.

  • A lower interest rate environment will push up multiples.

  • If your business is profitable and your books are clean, buyers will find you.

Even if you’re not planning to sell until next year, now’s the time to prepare.

Eric I. Mendelsohn- Business Broker