The Q2 Market Pulse was just released. I wish I had had it for my last article, Rethinking the Silver Tsunami. The buy-side of small business acquisitions has seen plenty of action: rising interest from self-funded searchers, new financing models, and growing competition.
The data on this trend is always scarce. Still, the IBBA (International Business Brokers Association) offers insight through its quarterly Market Pulse report, which tracks seller market sentiment (how confident sellers feel about the balance of deal flow and buyer interest). Rising sentiment might suggest buyer demand is outpacing new listings, while a decrease could indicate fewer buyers or an oversupply of businesses.
Let’s focus on the data for businesses valued between $500K and $5M, the sweet spot for self-funded searchers. We’ll skip sub-$500K businesses and $5M to $50M enterprises. According to the IBBA’s Q2 2025 Market Pulse highlights:
- $500K to $1M EV: 39% of sellers see it as a favorable seller’s market.
- $1M to $2M EV: 57% (up 14 points year-over-year, the largest gain across segments).
- $2M to $5M EV: 65%.
Looking back, seller sentiment has trended upward from Q2 2012 to Q2 2025. Comparing Q2 2015 to Q2 2025:
- $500K to $1M: From 17% to 39%.
- $1M to $2M: From 25% to 57%.
- $2M to $5M: From 27% to 65%.
Sentiment peaked in Q2 2021 during post-COVID optimism, dipped for a couple of years amid economic uncertainties, and has rebounded strongly by Q2 2025, surpassing levels from a decade ago except during early COVID disruptions. This suggests a strengthening sell-side, though certainly not a runaway market.
Complementing this sentiment data, median valuation multiples provide another lens on market dynamics (note: under $2M is based on multiples of SDE, and $2M and up on EBITDA). Year-over-year trends show stability in the lower end ($500K to $2M multiples holding at 2.8 to 3.0x since 2023) but a notable increase in the $2M to $5M segment (from 3.9x in Q2 2024 to 4.5x in Q2 2025), indicating growing seller leverage in mid-sized deals.
Deal structures further reflect seller confidence. In Q2 2025, cash at close (including buyer equity) averaged 76 to 84% across segments, with seller financing ranging from 9 to 11%:
- $500K to $1M: 81% cash at close, 9% seller financing, 6% self-canceling note, 4% rollover equity.
- $1M to $2M: 80% cash, 9% seller financing, 6% self-canceling note, 5% rollover equity.
- $2M to $5M: 84% cash, 11% seller financing, 1% earnout or self-canceling note, 4% rollover equity.
This means most sellers are securing the bulk of their value upfront, a sign of strong buyer commitment, tolerance for leverage risk, and market health.
What’s driving this? Here are some possible explanations based on the data:
Buyer growth isn’t overwhelming sellers. The surge in searchers and Entrepreneurship Through Acquisition (ETA) hasn’t drastically boosted seller confidence. If a seller already has 2 or 3 solid buyers (from whatever source), an extra few don’t move the needle much. The real confidence boost comes when interest shifts from zero to multiple buyers.
Deal flow keeps up. The Silver Tsunami slow roll may be delivering enough listings to match rising buyer numbers. Searchers feel intense competition, but sellers might not notice if supply is also growing.
Economic headwinds minimal for most. Macro factors like interest rates, inflation, or tariffs could temper optimism, but the data shows limited impact thus far. For instance, 82% of Main Street advisors (deals under $2M) and 76% of Lower Middle Market advisors report that tariffs affect 0 to 20% of their clients’ decisions to sell.
ETA’s small footprint. The self-funded search community, while growing, is a tiny fraction of the SMB buyer ecosystem. The term is everyone’s current favorite (mine too), but may barely register in the broader market.
For our buyers in the trenches. In this current market, the strengthening sell-side, bolstered by rising seller confidence, higher multiples, and robust cash deals, offers both opportunity and challenge for searchers. While the data paints a picture of a balanced landscape slightly tilted toward sellers, the real key lies in your persistence and creativity. Search remains a game of serendipity, where one well-timed connection can make all the difference. Happy hunting.
Link to the source document.
First published on LinkedIn.