Q1 2026 M&A Market Update: Why Buyers Are Getting Pickier
The M&A market in early 2026 is not closed, but it is becoming more selective. In this update, Kirk Michie explains what Candor Advisors is seeing across founder-led transactions, private equity activity, buyer behavior, valuation expectations, and market timing. For strong companies in favored sectors, the market may still support strong valuations and favorable terms. For others, buyers may be quicker to pass, which means founders need better data before deciding whether to go to market.
The M&A Market Is Still Open, But Not Equally for Everyone
Kirk’s main point is that the market remains attractive for A and A+ companies. If a business has strong financials, durable growth, clean operations, and sits in a sector buyers currently want, there may still be significant demand.
But that does not mean every business will receive the same level of attention. Private equity firms are becoming more selective. They are looking harder at size, vertical, geography, end markets, growth profile, and risk. A company that would have received broad interest in a looser market may now face a much narrower buyer universe.
That matters because buyer selectivity affects both valuation and structure. When buyers are competing for the same asset, founders may have more leverage over price and terms. When buyers are uncertain or only mildly interested, the seller may face lower valuations, more structure, and tougher diligence.
Private Equity Is Clustering Around the Same Assets
Kirk describes private equity firms as “really smart sheep.” They tend to cluster around the same types of businesses at the same time. When a sector becomes attractive, buyers crowd in, bid aggressively, and drive up multiples.
That can be great news for founders in favored categories. If a business is in a hot sector with strong EBITDA, recurring revenue, and a clean growth story, it may attract several buyers at once.
In that environment, sellers may have more control over:
Valuation
Cash at close
Earn-out requirements
Rollover equity
Seller notes
Legacy protections
The problem is that buyer enthusiasm can shift quickly. Once valuations get too high, buyers may step back and argue that sellers need to be more realistic. Kirk’s point is that buyers often forget they were the ones who bid up the market in the first place.
Why Some Founders May Need to Wait
This is not a simple “sell now” market.
Kirk makes the case that founders should be honest about whether the timing is right for both them and the market. If the company is growing, producing strong distributions, and the founder is not under pressure to sell, waiting may be the better option.
That is especially true for companies that are good businesses but not currently in the center of buyer demand. In those cases, going to market too early could mean fewer bids, weaker terms, and a lower valuation than the business may deserve in a better market.
The broader point is practical: a founder should not sell just because they are tired, curious, or responding to one unsolicited offer. They should understand where their business fits in the current market before making a decision.
Which Businesses May Still Attract Strong Buyer Demand
Even in a more selective market, certain sectors may still receive strong interest from private equity and strategic buyers. Kirk specifically mentions engineering services, CPA firms, professional services, software companies with recurring revenue, and certain parts of energy.
These are not the only attractive categories, but they show the broader pattern. Buyers are still looking for businesses with clear demand, durable cash flow, defensible margins, and a strong path for continued growth.
For founders, the key question is not simply, “Is the market good?” The better question is, “Is the market good for companies like mine right now?”
That answer depends on sector, size, EBITDA quality, customer base, revenue model, and buyer appetite.
The Broader Market Backdrop Is Creating More Caution
Kirk also points to several macro factors that are making buyers more careful.
Inflation risk, interest rate uncertainty, stock market volatility, private credit stress, and delayed exits inside private equity portfolios all affect deal behavior. When financing becomes more expensive or lenders become more cautious, buyers often lower valuations or add more structure to protect themselves.
Private equity firms also need to sell existing portfolio companies to return capital to limited partners and raise new funds. When those exits slow down, capital recycling becomes harder. That can reduce buyer urgency, even when funds still have money to invest.
None of this means deals are stopping. It means buyers are more careful about where they spend their time and capital.
Founders Need Data Before Making a Sell-or-Wait Decision
Kirk’s advice is to talk with a qualified transaction advisor before making assumptions. A founder does not need to launch a full sale process to get useful market feedback.
A good advisor should be able to provide:
A realistic valuation range
Current buyer appetite for similar companies
Likely deal structure
Expected private equity interest
Sector-specific market sentiment
Founders should be cautious with advisors who immediately say it is always a good time to sell. The better answer depends on the company, the market, and the founder’s goals.
The right time to sell is when the founder is ready and the market is ready. If only one of those is true, the outcome may suffer.
What This Means for Founder-Led Exits in 2026
For founders considering a sale in 2026, the message is clear: the market is not bad, but it is uneven.
Strong companies in the right sectors may still command high valuations and favorable terms. Companies outside current buyer demand may need a more thoughtful process, a stronger advisor, or more time to improve positioning before going to market.
This is where Candor Advisors can help founders pressure-test timing, valuation, buyer appetite, and transaction readiness before making a major decision. In a selective market, good preparation matters more. The founder who understands both their business and the market is in a much stronger position than the founder who waits for buyers to define the terms.
Signup for Kirk's Insights & Get Our Free E-Book
6 Secrets to Selling Your Business
