What Small Business Owners Need to Know About the Current M&A Market

If you’re a small business owner who has ever thought, “Maybe I’ll sell one day,” the current state of the M&A market offers some important lessons, even if a sale isn’t imminent.

I recently attended an event focused on the state of the M&A market, and while much of the media coverage centers on billion-dollar headline deals, the reality for small, privately held businesses looks very different. Here are the key takeaways that matter most for business owners, and what you should be doing now to protect (and grow) your future value.

Overall M&A Activity Is Down — Even Though Deal Values Are Up

At a high level, M&A activity is down in terms of deal volume, particularly for smaller companies. However, total M&A dollar value is up driven largely by mega-deals, especially in AI and large technology transactions.

For small businesses, this distinction matters. The increase in total deal value does not mean buyers are actively pursuing more small-company acquisitions. In fact, the opposite is true: buyers are being more selective and more cautious.

What this means for small business owners: Fewer deals are happening, so when buyers do engage, they are choosier, and the bar to get a deal done is higher.

Political and Economic Uncertainty Is Slowing Small-Company Deals

Another consistent theme from the event was the impact of political and economic uncertainty on deal activity. In particular, uncertainty around tariffs, trade policy, and the broader economic outlook is causing many buyers to slow down or pause transactions.

For smaller businesses, this uncertainty creates friction:

• Financing decisions take longer

• Risk tolerance is lower

• Buyers want more proof and fewer assumptions

As a result, deals that do move forward tend to involve deeper analysis and longer timelines.

Financial Due Diligence Is Deeper and Takes Longer

Because of this uncertainty, financial due diligence has become more protracted and far more detailed than in prior years.

Buyers and investors are spending significant time on:

• Reconciling actual results vs. forecasts

• Stress-testing assumptions

• Understanding revenue sustainability and margin drivers

• Evaluating working capital, cash flow quality, and accounting consistency

The takeaway is clear: financial information must be airtight. Sloppy books, inconsistent reporting, or overly optimistic forecasts are more likely than ever to delay or derail a deal.

Operational Efficiency Matters as Much as EBITDA Multiples

While valuation multiples still matter, buyers are no longer focused on EBITDA alone. Increasingly, they are looking for businesses that are:

• Operationally efficient

• Predictable and repeatable

• Well-run without over-reliance on the owner

Companies with clean financials and strong operational processes are viewed as lower risk and lower risk businesses command better outcomes.

Why This Matters Even If You’re Not Selling Anytime Soon

Many business owners think exit preparation starts when they decide to sell. In today’s M&A environment, that mindset puts you on the back foot.

When buyers are cautious and diligence is intense, the companies that stand out are those that:

• Have accurate, well-organized financials

• Can clearly explain performance and trends

• Operate efficiently with documented processes

Being “deal-ready” isn’t just about selling, it’s about running a stronger business today.

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Top Tips for Small Business Owners to Prepare Now

Whether a sale is one year away or five, here are practical steps you can take now to protect and enhance your business value:

1. Ensure Your Financials Are Accurate and Defensible

• Close your books consistently and on time

• Align reporting with accepted accounting standards

• Be able to clearly explain variances between forecasts and actuals

  
  

2. Strengthen Financial Processes

• Eliminate manual workarounds that create errors

• Implement consistent reporting and controls

• Invest in the right level of financial leadership, whether internal or fractional

  
  

3. Focus on Operational Discipline

• Document key processes and workflows

• Reduce reliance on any single individual (including yourself)

• Identify inefficiencies and address them proactively

4. Think Like a Buyer

Ask yourself:

• Would a third party trust my numbers?

• Can someone quickly understand how this business makes money?

• Where would a buyer push back — and how would I respond?

Addressing these questions early gives you leverage later.

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Final Thoughts

The current M&A market is sending a clear message to small business owners: quality, clarity, and consistency matter more than ever.

Even in a slower deal environment, well-run businesses with strong financial integrity are positioned to succeed whether that means attracting buyers, securing financing, or simply operating with greater confidence.

If you want help assessing how prepared your business is, or strengthening your financial foundation - that’s exactly the work I do.

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What concerns you most about the idea of selling your business?

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• Obtaining the right multiple/valuation.
• Knowing when is the right time to sell.
• Ensuring continuity of the business after I leave.
• Impact to my employees.