How to Take Full Advantage of the Surge in Lower Middle Market Deal-Making

How to Take Full Advantage of the Surge in Lower Middle Market Deal-Making

Overall, there has been a slowdown in M&A activity in the past couple of years, post-pandemic.

After an all-time high of 42,436 transactions in 2021, valued at more than $5.6T… deal-making tumbled to 41,808 transactions valued at $4.5T in 2022. And so far, with Q2 numbers just in, it looks like 2023 is following this “downward” trajectory.

This is to be expected as the market “rebalances” after the record-setting deal-making frenzy we had in 2021, which was not sustainable because the result of very special circumstances with the global shutdown in 2020… and the rush to make acquisitions when the world opened back up.

What was a Seller’s market has shifted to a Buyer’s market, with asking prices and valuations dropping significantly.

In the midst of all this, there is a notable trend worth keeping a close eye on. As I wrote in my previous article, M&A activity is actually projected to go up in the lower middle market.

If you want to maximize your opportunity here, you should start working with an investment banker. Here is what one of these M&A pros can do for you:

  • They help you get “your house in order”.
  • They have a network of trusted Buyers they can access.
  • They can really enhance your negotiations.
  • They can tell you if you’re getting a reasonable deal.
  • They can increase your profits on the deal.

And, importantly, they help you gain value, reduce risk, and protect the deal with transactional insurance, such as a Representations and Warranty (R&W) policy or Transaction Liability Private Enterprise (TLPE) insurance.

TLPE, in particular, has been taking the lower middle M&A world by storm since its introduction a few years ago.

That’s because TLPE goes where traditional R&W insurance can’t which are geared towards deals generally geared towards transactions north of $200m and not mid-market focused.

Investment Bankers such as Gaurav Bhasin of Allied Advisers provides the very type of help you want. In the last 12 months, according to a recent report, Allied has “advised mid-market clients on exits to Fortune 50 companies, top tier PE firms, and software consolidators.

Among those companies is one of the world’s largest retailer. And we were involved in the deal, providing transactional insurance to help make it happen to give peace of mind to the sellers.

Why Get Help?

As I say, there has been an uptick in M&A activity in the lower middle market. And we’re predicting a continued increase. That means if you’re the owner of a business looking to exit, you’re going to have a lot of competition from other companies also going on sale.

An investment banker will help you stand out from the crowd, especially in the current Buyer’s market we’re in currently.

In this context, think of an investment banker like a member of the team who can help run a competitive process to get maximum interest from potential buyers… and ensure you are getting a fair sales price.

They can minimize your negatives, emphasize the positives. And all this, including the benefits I listed above, brings attention to your company for sale… and makes it more attractive.

That attracts multiple Buyers, which drives the price up.

Also, as I mentioned, a solid investment banker can help you secure insurance coverage for the deal. And that’s the part of the puzzle that I’m involved with.

If you would like more information about Representations and Warranty insurance – or a policy Transaction Liability Private Enterprise in the case of mid-market transactions – could help protect your deal, please contact me, Patrick Stroth, at


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