The Shape of Demand: How the Lower Middle Market Buyer Landscape Is Being Rewritten

In the world of lower middle market M&A, the profile of the modern buyer is changing—and fast. Once dominated by traditional private equity firms and corporate buyers, today’s deal ecosystem has expanded to welcome a new wave of players: independent sponsors, family offices, holding companies, search funds, and a surge of flexible, founder-friendly capital sources.

Axial’s latest data paints a vivid picture of this evolution. With nearly 1,000 new buyers joining the platform in just the first few months of 2025, and buyer demand increasingly concentrated in the $1M–$3M EBITDA range, the market is tilting toward smaller, more nimble acquirers who value operational involvement, long-term partnerships, and creative deal structures over sheer scale.

Whether you’re a business owner weighing your exit options, or an advisor looking to keep pace with this shifting terrain, understanding who’s buying—and why—is more important than ever. This report offers a front-row view into the forces shaping today’s buyer landscape: who’s entering, what they’re targeting, and how they’re getting deals done.

Included in the analysis:

• The number of active Axial buyers
• Deal demand by EBITDA range & firm type
• Trends in new buyers joining the platform
• Closed deal breakdown
• Average TEVs by firm type
• Axial buyer definitions

Together, we hope these data points provide a clearer view of who is buying, what they’re targeting, and how buyer behavior is evolving over time.

New Buyers Joining Axial | 2019 – 2024

The number of new buyers joining Axial has grown significantly in recent years. After relatively flat growth from 2019 to 2022, new Axial buyside members nearly doubled in 2023, increasing by 96% year-over-year. That growth continued in 2024, increasing another 38% to reach 1,942—an all-time high.

2025 is off to a record-setting pace for activations, with 994 new buyers joining the platform year to date. Below are select firms that became Axial members this year.

Featured New Axial Buyers

What Buyers Want: Deal Demand By EBITDA Range

Below are the current deal intents by EBITDA range for active buyers on the Axial platform, broken down by buyer type. 

Deal Intent Definition: A project created by a buyside member on Axial to signal the types of businesses they are actively looking to acquire or invest in, including criteria such as industry focus, size, and geographic preferences. It reflects their current acquisition mandate and helps streamline the sourcing and matching process on the platform.

Deal Intents By Buyer Type & EBITDA Range

Demand is concentrated in the $1M–$3M EBITDA range, with more than 90% of deal intents falling in this bucket for nearly every buyer type. Private Equity has the strongest interest in the $3M–$10M range, suggesting a preference for established, scalable businesses that meet institutional thresholds for size and return profile. Individual Investors, by contrast, have the highest demand in the $1M–$3M (96.03%) and sub-$1M (92.06%) ranges, consistent with a focus on smaller, more accessible businesses.

Independent Sponsors, Family Offices, and Holding Companies all exhibit strong and relatively balanced demand across the $1M–$10M EBITDA range, with 80-95% of deal intents falling within these tiers for each buyer type. This suggests a collective appetite for mid-sized businesses that are large enough to support growth but small enough to remain flexible and founder-friendly. These buyer types may be especially appealing to sellers looking for a combination of operational involvement, long-term orientation, and tailored deal structures.

Search Funds are especially focused in the $1M–$3M EBITDA range ( 97.93% of deal intents), a signal that most searchers continue to prioritize businesses that are financially viable but operationally approachable for first-time operators.

Closed Deals By Buyer Type | 2021 – 2025

The closed deal data from 2021 through May 2025 suggests a gradually diversifying buyer landscape on Axial. Independent Sponsors have maintained a strong and steady presence, consistently accounting for around 30% of closed deals. In 2025 so far, Family Offices have closed the largest share of deals, representing 30%—a notable increase from 16% in 2024. The growing share of Search Funds and Individual Investors closing deals over the past two years may reflect a broader mix of strategies and capital sources pursuing opportunities in the lower middle market.

Average Closed Deal TEV

The total enterprise value (TEV) data highlights potential differences in deal size preferences by buyer type. Private Equity has consistently transacted at the higher end of the market, with average TEVs ranging from $12.9M to $17.1M over the past four years, and $14.2M so far in 2025. Independent Sponsors and Family Offices exhibit more variability, with sharp peaks in average deal size in 2023 and 2024, followed by a drop in 2025. While it’s early in the year, this may suggest a temporary shift toward smaller or more opportunistic deals.

Holding companies stand out in 2025, with the highest average TEV of any buyer type at $31.4M. Although this is partial-year data, this jump may indicate a strategic push toward larger platform acquisitions.

Buyer Type Definitions – According to Axial

Axial categorizes buyers into distinct types to help business owners and advisors understand the core differences between the various firm types within the current buyer universe. The following are Axial’s buyer type definitions, each paired with a current Axial member that fits the profile. Each firm’s logo is hyperlinked to visit their Axial profile.

Private Equity Fund: A private equity investment firm with legally enforceable capital commitments that enable the firm to call capital at its discretion from a group of already committed limited partners (“LPs”).

Independent Sponsor: Individual or investment firm raising external equity capital on a deal-by-deal basis to fund acquisitions. Independent Sponsors are formed with the intent to acquire and/or invest in multiple companies.

Family Office: A flexible investment entity using permanent family capital formed to support the investment and administrative objectives of a private individual or family. The family office typically makes a variety of investments in private companies, funds, and related opportunities, and has the flexibility and internal capital to lead acquisitions as well as act in more limited capacities (minority investor, LP, etc).

Holding Company: A capitalized entity that owns a controlling interest in one or more companies and typically operates as an umbrella or parent company where the primary capital used to acquire assets, or “holdings,” comes from the parent company’s balance sheet.

Corporation (Strategic Acquirer): An operating company that is seeking to acquire one or more additional operating businesses to integrate into or complement its existing business operations.

Search Fund: An individual or set of co-founders that has the sole purpose of acquiring a single, privately-held business and assuming management responsibilities at the acquired company.

Individual Investor: An individual who meets the requirements of “Accredited Investor” defined in Rule 501 of Regulation D under the Securities Act. This member type is typically looking to build a portfolio of direct investments in private companies. They utilize their own capital to fund deals rather than raising external capital. This member type does not typically assume the CEO position at companies in which they invest. This renders them distinct from independent sponsors and traditional search funds.

Axial is the trusted deal platform serving the lower middle market ($2.5-$250M TEV).

Over 3,500 advisory firms and 3,000 corporate and financial buyers have joined Axial to efficiently connect with relevant capital partners, source actionable deals, and build new relationships.

Visit the Member Closed Deals page to see selected transactions that have been sourced and closed via Axial.