Buyer-Side Demand in the U.S. Lower Middle Market: A Cross-Sectional Analysis of 76 Active Acquirers (Q4 2025–Q2 2026)

Most empirical work on private-equity (PE) mergers and acquisitions in the lower middle market (LMM) draws on closed-deal data published after transactions complete. This paper takes the inverse view, presenting a cross-sectional snapshot of ex ante buyer demand. The analysis aggregates standardised buy-box criteria from 76 actively-sourcing U.S. acquirers (42 PE firms, 19 search funders, 5 search/independent hybrids, 4 family offices, 4 independent sponsors, and 2 strategic platform acquirers) collected between Q4 2025 and Q2 2026. Investment criteria are catalogued across 70 standardised fields covering firm type, EBITDA range, equity check size, industry tags, deal structure, owner-continuity preferences, and geographic focus. Three findings emerge. First, buyer demand is heavily concentrated in services and manufacturing verticals: manufacturing (50%), electrical contracting (40%), HVAC (36%), distribution (34%), and home services (29%) form the deepest pools, while software and SaaS combined attract only 26% of buyers, a marked divergence from popular coverage. Second, EBITDA targeting clusters in the $3M–$15M range, with a median minimum threshold of $5M and a structural 30–40% multiple discount for sub-platform-scale add-on candidates relative to platform investments. Third, 90% of buyers require control, and only 11% entertain minority recapitalisations, indicating that the recap-friendly buyer subset is narrower than seller perception suggests. The paper situates these findings within prior literature on buy-and-build strategies, search-fund entrepreneurship-through-acquisition, and M&A advisor information-asymmetry effects, and discusses implications for sellers, advisors, and capital allocators. Limitations of buy-box-versus-transactional-reality divergence and sample self-selection are addressed.