We are getting more and more inquiries from "professional investors" on smaller and smaller deals, so my first thought is that competition and demand are increasing. However, on the supply side, some of this may be offset by the increasing need for baby boomers to exit their businesses and retire.

I agree with many that there is a lot of dry powder in the market, but I also think we’re seeing fewer true lower-middle-market opportunities in the $2M–$25M EBITDA range. That scarcity is pushing more firms to dip into smaller deal sizes, often with the hope of closing on two or three at once. At the same time, there’s been a noticeable influx of first-time investors, searchers, and independent sponsors. Many of these individuals are able to get a company under LOI, but they overbid and ultimately cannot close. We’ve seen several situations where a business went under contract at nearly double what we had been able to underwrite, even with creative structuring. In most of these cases, the buyer retrades the price down multiple times and still fails to secure equity commitments. The ripple effect is that seller expectations and reserve prices continue to move higher, making it even harder for disciplined buyers to transact.