The Numbers · 2026 H1
Lower-middle-market activity, in five numbers.
Updated today · Next refresh Q3 2026
6.1×
Median LMM closing multiple
EV / EBITDA, $1 to $25M EBITDA band, post-discount
GF Data H1 2025
73%
Preparation Gap
Share of post-LOI adjustments that exceed 15% of LOI value
WP-001, Cordis Institute
73%
PE add-on dominance
Share of PE buyouts that are add-ons (vs. platforms)
Bain 2025 Midyear PE Report
75%
Deals with escrow
Share of LMM transactions with post-close escrow at median 1% of value
SRS Acquiom 2025
90–120days
Diligence calendar
Typical LOI-to-close window in LMM transactions
GF Data H1 2025; SRS Acquiom 2025
Sources, GF Data H1 2025 LMM Pricing Report (multiples, diligence window); WP-001 The Preparation Gap (Cordis Institute, SSRN 6515478) for adjustment incidence; WP-002 The Buyer Lane Preparation Map (Cordis Institute, SSRN 6735844) for buyer archetype data; Bain & Company 2025 Midyear PE Report for add-on dominance; SRS Acquiom 2025 Lower Middle Market Deal Terms Study for escrow prevalence. Read the underlying research →
No. 02
What is new this week
Essay Today

How buyers actually price your business, and the work that closes the gap before the room.

Most founders walk into the room expecting one price and hear another. The gap is built in the years before the room, not at the table.

Feature · Issue 04 · 22 min read · Cites Warrillow, Damodaran, Pratt's Stats
Framework 2 days ago

The Five Risk Axes, explained for operators.

Customer concentration, key-person dependency, documentation quality, recurring mix, decision-rights legibility. The five inputs buyers actually score.

Framework · Updated quarterly
Playbook 3 days ago

Responding to an unsolicited LOI in the first 48 hours.

What to say, what not to say, who to call, what to read. The 90-minute window where most founders give the buyer leverage they cannot get back.

Playbook · Step-by-step · ~1,650 words
Deal Note 4 days ago

Industrial services · $40M EV · Closed at LOI price

Strategic acquirer; clean diligence; no working-capital adjustment at close. What the founder did 18 months out that made it possible.

Deal Note · Anonymized composite · Industrial Services
Ranking 5 days ago

Ten common diligence findings in the lower middle market.

Ranked categories of findings buyers surface in LMM diligence. What they look for, what they discount for, and the operational work that addresses each.

Power Ranking · 10 items · WP-001, SRS Acquiom, Cherry Bekaert
Essay 6 days ago

Hiring the second-in-command you have been avoiding for nine years.

Why the COO you keep almost-hiring is the single decision that moves enterprise value more than any other. Plus, the script for opening the conversation.

The Operator · Issue 04 · 16 min read
Tool 8 days ago

The Exit Readiness Scorecard.

Score yourself across the five risk axes a real diligence team uses. 12 minutes, no email gate, honest output.

Tool · Interactive · 12 minutes
Framework 9 days ago

The Eight Value Drivers, and what is still useful in 2026.

Warrillow's framework, with our commentary on what holds up, what is dated, and how the five-axis read updates it for current LMM conditions.

Framework · Cites Built to Sell, Pratt's Stats
Essay 11 days ago

The HVAC roll-up that almost happened, and the four months the founder will not get back.

Reconstruction of an LOI that died in week 11 of diligence. Told from inside the seller's kitchen. The fix was 24 months earlier.

Field Notes · Issue 04 · 9 min read
No. 04
Power Rankings

Ten common diligence findings in the lower middle market

Ranked categories of findings buyers routinely surface in LMM diligence, with the operational fix that addresses each. Frequency data forthcoming with the next Foundry data refresh.

01
Owner add-backs that do not survive a real QofE
Personal expenses, non-recurring items, and family-member compensation that the seller treats as add-backs but the buyer's QofE team disallows. Documented in WP-001 as the most-cited adjustment category.
02
Customer concentration above 25% in top customer
Triggers a discount band on the multiple. The remediation is contractual structure and relationship-depth work in the 18 to 24 months before going to market, not diversification in the room.
03
Key-person dependency surfacing in team interviews
Often invisible in financials. Surfaces when buyers talk to the senior team. The fix is the second-in-command hire and documented decision-rights legibility.
04
Working capital target dispute
Buyer's NWC target lower than the founder expected, reducing cash at close. Documented in SRS Acquiom 2025 as one of the top three negotiation friction points.
05
Documentation gaps on customer contracts
Triggers buyer-favorable indemnification language, longer survival periods, larger escrows. Cleanup is a 90-day fix; the discount lasts the life of the deal.
06
Recurring revenue overstated
Buyer defines 'recurring' more narrowly than the founder. Multiple compresses when the buyer's definition is applied. Reconciliation is best done pre-marketing.
07
Cap table or option-pool surprises
Phantom equity, unwritten promises, expired option grants. Surface late in diligence and force restructuring just before close.
08
Vendor concentration mirroring customer concentration
Top supplier represents over 30% of COGS; switching cost is opaque. Buyer prices this the same way they price customer concentration.
09
Real estate and related-party arrangements
Founder owns the building and rents to the business at non-arm's-length terms. Triggers either a structural change at close or a discount to compensate for the unwind.
10
Outstanding litigation or threatened claims not disclosed pre-LOI
Erodes buyer trust even when individually small. The damage is to the broader diligence relationship, not just the specific item.

Read the full ranking →

No. 05
How Foundry helps
01

Understand how buyers will price your business.

Score yourself on the same risk axes a real diligence team uses. Read how buyers think about pricing in your sector. Foundry does not produce valuations; it teaches the buyer's pricing logic so you can prepare for it.

02

See your business through buyer eyes, early.

Most exit advice arrives 6 months out, when the work that would have moved the price is already too late. Foundry catches you 2 to 4 years before, when operational decisions still compound into what you walk away with.

03

Find the answer to today's question.

"Should I take this LOI seriously," "how do I hire the COO I have been avoiding," "what is an indemnification cap." Foundry has it. Look it up, take it with you, send it to your CFO.

04

Get smarter without getting sold.

No sales calls, no consulting funnels, no peer groups with dues. The reading and the reference. If you ever want to go deeper, the Cordis MRI is one click away.

No. 06
Where are you?
Stage 01
Just thinking about it.
Years out, no transaction in mind, just want to understand how this works.
Start with the library →
Stage 02
A few years out, want to be ready.
3 to 5 years before any transition; want to do the work that compounds.
Take the scorecard →
Stage 03
12 to 24 months out, working toward it.
Active preparation. Need the frameworks and a real read on where the gaps are.
Frameworks, then MRI →
Stage 04
Offer on the table right now.
Unsolicited LOI, strategic walked in, or you triggered the conversation.
Read the LOI playbook →