Merger and Acquisition

Article Danielle Camara

Most valuation disagreements in M&A aren’t caused by unrealistic sellers or opportunistic buyers. They happen because each side is measuring value using a different yardstick.

Some owners undervalue what they’ve built. Others overvalue it. Neither is unusual. What matters is recognizing that valuation isn’t a single number — it’s a function of assumptions, risk, and perspective.

For business owners, enterprise value often reflects years of growth, relationships, reputation, and future potential. For buyers, value is grounded in what can be reliably transferred, scaled, and financed — in other words, risk-adjusted, transferable cash flow.

Getting this wrong is expensive in either direction. Undervaluing a business can leave millions of dollars on the table. Overvaluing it can be just as costly, preventing a transaction altogether and leaving significant liquidity unrealized because expectations drift beyond what the market will support.

Understanding this distinction is critical — especially in today’s more disciplined deal environment.

Sellers Sell Performance. Buyers Buy Durability.

Most valuation gaps stem from one core issue: sellers focus on what the business has achieved; buyers focus on how reliably those results will continue.

A record revenue year may signal strength to an owner. A buyer may see normalization risk.

Adjusted EBITDA may reflect operational realities to management. A buyer may question the sustainability of add-backs or the true cash flow conversion.

Future growth opportunities may feel obvious to a founder. A buyer discounts what isn’t proven, contracted, or systematized.

The market pays for durability, not optimism.

Risk Is Priced — Whether You Acknowledge It or Not

Another common disconnect lies in perceived risk.

Owners understand their top customers, their supplier relationships, and their operational nuances. Buyers evaluate from the outside. If revenue is concentrated, reporting is inconsistent, or leadership is overly dependent on one individual, that uncertainty gets priced into the valuation.

Risk doesn’t always kill a deal — but it often compresses the multiple, or, significantly alters the payment terms and considerations I a way where a seller will bear a substantial risk post-close.

The more transferable and institutional the business appears, the narrower the valuation gap becomes.

Emotional Value vs. Market Value

For many founders, the business represents decades of personal investment. That emotional equity is real — but it is not a line item in an underwriting model.

Buyers are evaluating:

  • Sustainable earnings
  • Cash flow conversion
  • Scalability
  • Leadership continuity
  • Exit potential

When sellers conflate personal value with market value, expectations widen — and negotiations become strained.

Closing the Gap Before the Process Begins

The most successful transactions aren’t the ones where the buyer “comes up” to meet expectations. They’re the ones where the seller has prepared early enough to remove uncertainty, and, they’ve worked with an advisory team to understand an intellectually honest valuation that is stooped in both academic forms of valuation and real time market intelligence.

That preparation often includes:

  • Cleaning up financial reporting
  • Reducing customer concentration
  • Building second-tier leadership
  • Documenting processes
  • Stress-testing growth assumptions
  • Selecting an M&A Advisor / Investment Banker that will eventually guide you through a process that can provide you honest feedback.

Enterprise value is rarely created during negotiations. It is built in the years leading up to a transaction.

In today’s M&A market, buyers are active — but disciplined. Premium valuations are still achievable. But they are earned through clarity, durability, and preparation.

At Dean Dorton M&A Advisory, we help business owners move from assumption to alignment — translating performance into market-backed value. We don’t just estimate what your company is worth; we help you understand how buyers will underwrite it and where value can be strengthened before you go to market.  We put this advice on the line by also aiding and assisting our clients with the market execution process. 

If you’re considering a transaction in the next one to three years (or sooner), now is the time to evaluate your value drivers. Connect with a Dean Dorton M&A advisor to start the conversation.

Article Danielle Camara

Setting the Stage for a Successful Transaction Year

As 2026 begins, the lower-middle-market and middle market M&A environment is best described as active, disciplined, and slightly selective. Buyers are paying premiums for businesses that are well-prepared, well-run, and able to clearly demonstrate value.

For business owners considering a sale, recapitalization, or strategic investment over the next 12–36 months, preparation is no longer optional. Deal readiness is a competitive advantage. Why? It is Dean Dorton’s view that the supply of deals coming to market in 2026 and 2027, due to the subdued supplies seen in 2024 and 2025, will rightly create some distractions and ultimately stretch buyer bandwidth (economic an mental bandwidth). Preparation and readiness is always rewarded in a crowded market, particularly when trying to keep buyers engaged. 

2026 M&A Market Outlook: Middle Market

We expect solid M&A activity in 2026, driven by:

  • Stabilizing and improving interest rates, which improves valuation confidence
  • Significant private equity dry powder seeking deployment
  • Strategic buyers recapturing lost confidence and re-entering the market to drive growth
  • Debt markets being open and ready for business. 

That said, deal flow will be uneven. Buyers are moving forward quickly on high-quality assets—and passing just as quickly on those with operational gaps, unclear financials, or elevated risk. The message is clear: prepared sellers will win in 2026.

What Buyers Will Expect in 2026

Financial Readiness

Buyers are prioritizing clarity and credibility. Expect scrutiny around:

  • GAAP-compliant financials
  • Defensible EBITDA normalization
  • Pro forma adjustments that reflect a full year of tariff exposure or ensuing business changes made in reaction to tariffs
  • Forecasting accuracy and working capital trends

Businesses that can clearly explain performance and future growth assumptions will move faster and command stronger valuations.

Operational Readiness

Operational discipline is a key differentiator. Buyers are focused on:

  • Strength and depth of management
  • Scalable systems and documented processes
  • Customer and supplier concentration
  • Technology and data integrity

Owner-dependent businesses or those lacking operational transparency face greater risk of delays, retrades, or lost deals.

Is Your Business Transaction-Ready?

Transaction readiness is a process, not a point in time. Key indicators include:

  • Clean, timely, and defensible financial reporting
  • A clear, executable growth story
  • Operational independence from ownership
  • Identified and mitigated risks
  • Early alignment with experienced M&A advisors

Companies that address these areas early tend to control the process, protect value, and achieve better outcomes.

Preparing Now for a Successful 2026 Transaction

The most successful transactions begin long before a business goes to market. January is the ideal time to assess readiness, identify value drivers, and align strategy with buyer expectations.

At Dean Dorton, we help middle-market companies evaluate transaction readiness, strengthen positioning, and execute successful outcomes.

Take the Next Step

If a transaction is on your horizon—whether in 2026 or several years out—now is the time to assess readiness and build a plan. Early preparation gives owners greater control over valuation, timing, and deal structure.

Connect with a Dean Dorton M&A advisor to evaluate your transaction readiness, identify value drivers, and position your business for a successful outcome. A confidential conversation today can make a measurable difference in the results you achieve tomorrow.

Let’s start the conversation.

Article Danielle Camara

It’s January, the start of a new year. 2026, let’s go!

If you’re a business leader, board member, department manager or simply an intentional go-getter, you’re wrapping up your goals for the year ahead.

You’ve reviewed 2025. You’ve celebrated your wins and learned from your losses. Now, 2026 is poised to be amazing.

Your whiteboard is full of ideas and plans for the year. You’ve even used three different colors to prioritize initiatives. You asked ChatGPT to evaluate your plan and subscribed to the premium version because you only want the best from your AI buddy. You built forecasts in complicated spreadsheets, even learning how to link cells between sheets. You figured out Canva so you could launch a marketing campaign, and dang it; your circles and squares look pretty good. Last night, you sent the team an invitation to the 2026 kickoff summit, scheduled for this Friday at a venue you haven’t secured yet.

2026 is going to be awesome! But let’s pause for a moment and make sure the house is in order.

Ask yourself:

  • Do you have a process to track and measure all this success?
  • Is your accounting function, including your team, software, and processes, ready?
  • Are your financial reports aligned with your 2026 initiatives and goals?
  • Will you be notified promptly if operations are not going as planned?
  • Can you tell if you’re winning or losing with a quick glance at your financial dashboard?

If you answered “no” to any of these questions, you may not have the accounting infrastructure needed to support your plans for 2026.

Yes, adding accounting to a conversation about goals can feel like a box of New Year’s fireworks that fizzles instead of explodes. But if you want your business to explode in a good way rather than fizzle in 2026, your accounting function needs to be in order.

That’s where Dean Dorton’s Accounting and Financial Outsourcing (AFO) services come in. We handle your accounting so you can stay focused on achieving your organization’s goals.

Our team of accounting professionals uses cloud-based technology to manage your accounting processes, which may include:

  • Recording vendor invoices
  • Vendor payments
  • Customer invoicing
  • Cash flow forecasting
  • Month-end close
  • Customized reporting and dashboards
  • Collaboration with tax preparers
  • Budgeting
  • Key performance indicators
  • Insights from a 600-person accounting and advisory firm

You have a plan for 2026 to be an exceptional year. Don’t let your accounting function become an obstacle. Let us be the partner that ensures your accounting is an asset in pursuit of your goals.

My name is Justin Hubbard, and I am the director of the Accounting and Financial Outsourcing team at Dean Dorton. I would be thrilled to discuss your plans for 2026 and how we can help support them.

Article Autumn Hines

High-profile fraud cases tied to federal funding continue to surface, not because rules are unclear, but because oversight too often prioritizes compliance over insight. The Uniform Guidance establishes clear expectations, yet fraud persists when monitoring becomes a checklist exercise rather than a risk-focused discipline. 

The problem with checkbox oversight 

Traditional monitoring frequently focuses on desk reviews, policy confirmation, and audit reports. While necessary, these steps rarely reveal whether controls are functioning in practice. Fraud typically thrives in the gap between documented compliance and actual operations. 

Monitoring requires presence, not just reports 

Effective oversight means understanding how programs operate day to day. Risk-based monitoring, informed by COSO principles, defines “normal” operations and flags deviations. In many of the largest fraud cases, basic verification such as capacity checks, operational observation, and participant validation could have surfaced concerns years earlier. 

Risk should drive rigor

Not all recipients present the same level of risk. Oversight resources are most effective when aligned to risk profiles, with more intensive monitoring for organizations experiencing rapid growth, limited controls, or leadership transitions, and streamlined approaches for mature organizations with proven control environments. 

The case for showing up 

Site visits, whether planned or unannounced, remain one of the most powerful fraud deterrents. Seeing operations firsthand provides insight that documentation cannot provide and reinforces accountability for both funders and recipients. 

Accountability requires investment

Strong internal controls are not free. Expecting organizations to manage complex federal requirements without adequate administrative resources invites failure. Fraud prevention is not overhead; it is an essential infrastructure.

A better path forward

Preventing fraud does not require new regulations. It requires disciplined implementation: risk-based monitoring, adequate resourcing, operational visibility, and cultures where concerns are raised early. Organizations that treat oversight as stewardship rather than bureaucracy are better equipped to protect public funds and sustain trust. 

Dean Dorton helps organizations move beyond compliance toward practical, effective oversight. Contact your Dean Dorton advisor to learn more about strengthening your monitoring and fraud prevention approach. 

Article Autumn Hines

After a strong finish to 2024 and an optimistic start to 2025 in the deal market, U.S. merger and acquisition activity has cooled noticeably. Through the first nine months of 2025, total deal volume is down roughly 10% year-over-year, with nearly every sector feeling the slowdown.

But the story isn’t one of collapse — it’s one of uncertainty.

The Big Picture

Business owners, investors, and lenders alike have spent most of 2025 navigating a confusing mix of signals:

  • The economy is still growing — just at a slower pace
  • Interest rates are still high — but may start easing soon
  • Inflation decelerated, only to flare up again
  • Trade policies and tariffs remain fluid — but clarity is coming
  • Consumers kept spending even as they amassed record debt
  • Historically low unemployment coexisted with signs of a cooling job market

That “wait-and-see” mindset has led many would-be sellers to delay taking their companies to market and many buyers to pause until they can model what’s next with more confidence.

The result? A quieter market that’s building pressure beneath the surface.

The Numbers Behind the Slowdown

Our analysis of U.S. deal activity shows:

  • Overall M&A volume is down about 10% from 2024 and 9% from 2023. And 2024 and 2023 were subdued comparisons relative to pre-COVID periods. 
  • The Technology Services sector is the rare bright spot, up about 12% year-over-year, thanks to strong demand for cybersecurity, cloud, and AI-driven services.
  • Nearly all other sectors — especially distribution, health services, retail, and consumer products — have seen double-digit declines.

This isn’t about a weak economy. It’s about uncertainty — and the ripple effects it creates for buyers, sellers, and lenders.

What’s Driving the Hesitation

1. Global Trade and Policy Uncertainty

Trade policy remains one of the biggest wildcards affecting business confidence — and by extension, M&A activity.

  • The U.S. still imports more than 9% of its total goods from China, representing over $430 billion annually. While that share has declined from over 20% a few years ago, China remains a critical supplier across technology, consumer, and manufacturing categories.  A trade deal has yet to be reached with China, but all hopes and indications are that both sides will reach a broad resolution that will hopefully ‘stick’ in the coming weeks. 
  • Meanwhile, the U.S. and India are reportedly nearing a comprehensive trade agreement, with legal drafting underway. The U.S. imported about $91 billion in goods from India in 2024 — roughly 2.0% of total imports — and India’s share is steadily rising in higher-value manufacturing and technology products.

If these trade agreements reach resolution, the resulting stability in supply chains, tariffs, and input costs would give dealmakers something they haven’t had in a while: visibility. That clarity enables more reliable pro forma modeling — and more confident deal execution.

2. High Borrowing Costs

Even with expected Federal Reserve rate cuts on the horizon, financing a leveraged transaction remains far more expensive than it was just a few years ago. That means buyers are forced to use more equity to finance deals, making it harder to reach return thresholds — especially in the lower middle market.

3. Tighter Credit Conditions

Banks and private credit funds are still lending, but with tighter structures, higher spreads, and more caution. Deals are still getting financed, but the underwriting bar is higher, and timelines are longer.

4. Valuation Gaps

Sellers still remember the strong multiples of 2021–22. Buyers, however, are pricing for today’s higher cost of capital and lower growth forecasts. That mismatch continues to delay many processes, though creative structures — like earnouts or seller notes — are helping bridge the divide. 

What Could Break the Logjam

While the challenges currently restraining mergers and acquisitions are significant, they are expected to be temporary in nature. Several factors could bring the market back to life in 2026:

  1. Trade clarity — The conclusion of U.S. negotiations with China, India, and Mexico could stabilize costs and restore supply chain predictability.
  2. Interest rate direction — Expected Fed rate cuts would immediately improve deal financing math.
  3. Credit normalization — As lenders gain comfort, middle-market financing should become more fluid again.
  4. Private capital pressure — Family offices and private equity firms continue to hold significant “dry powder” that must be deployed.

When those pieces align, activity could rebound quickly — and valuations could move up with them.

Why Sellers Should Prepare Now

The best time to sell is right before the market wakes up.

If you wait until everyone else is ready, your deal risks getting lost in the noise.

By starting now — engaging an M&A advisor, preparing offering materials, establishing a data room, and refining your company’s growth narrative — you’ll be positioned to launch early in 2026, when buyers re-engage in force.

Buyers are hungry for dealflow. Capital is still available. What’s missing is clarity — and that’s beginning to change.

Our Take

2025’s slowdown isn’t about weakness — it’s about fog.  As trade deals finalize, rates normalize, and credit steadies, that fog will lift. When it does, which we expect in the near term, both buyers and sellers who have been waiting on the sidelines will rush back in.

For business owners, that means now is the right time to get ready. When the window opens — and it will — the prepared will be the first to capture it.

Dean Dorton M&A Advisory guides business owners and investors through all aspects of M&A transactions, including market preparation, negotiations, deal execution, timing, valuation, and transaction readiness.  If you’re considering a sale or recapitalization, our team can help you prepare and position your company for the next wave of opportunity.

Article Autumn Hines

Selling a business is one of the most significant decisions a business owner will make, often representing the culmination of years of hard work. Yet, the process of selling a business—particularly in the lower middle market—is rife with misconceptions. With approximately 75% of private businesses expected to change hands in the next decade, understanding the realities of M&A is more crucial than ever. Believing these myths can lead to poor decisions, missed opportunities, or even failure to close a deal. This article demystifies the top ten myths business owners believe about selling their business, helping you or your clients better prepare for a successful exit. 

1. “I can sell my business quickly and easily.” 

Many business owners underestimate the time and complexity of selling a business. They assume it’s as simple as responding to the frequent overtures they receive over email or listing their business and finding a buyer. In reality, the sale process can take 6–12 months or longer, depending on the industry, business size, and market conditions. Proper preparation, financial due diligence, and negotiations require both time and expertise. 

Reality: Selling a business is a marathon, not a sprint. Proper planning, robust marketing efforts, moving with a structured cadence, and having a clear strategy are essential for achieving the best value. Talking with advisers early in the process to understand what it takes to sell a business and balance non-value qualitative goals is key to developing a strong plan. 

2. “I know what my business is worth.” 

Business owners frequently misvalue their companies by relying on industry rules of thumb or comparing themselves to publicly traded companies. The best determinant of value is established during a fully marketed auction process conducted by a qualified M&A adviser. Moreover, these same advisors can also provide solid guidance or estimates of value before a process. And because sellers have an intimate understanding of their business, enlisting an adviser who can clearly articulate that message is critical.  

Reality: Your business is worth what the market is willing to pay based on concrete data and market conditions. Private company valuations depend on numerous factors, including earnings quality, growth potential, customer concentration, and market conditions. 

3. “I don’t need an advisor to sell my business.” 

Some owners believe they can handle the sale independently to save on advisory fees. However, navigating a sale without a professional often leads to undervaluation, legal pitfalls, and missed opportunities. Investment bankers bring expertise, negotiation skills, and access to a network of qualified buyers. A study by BVR’s DealStats (formerly Pratt’s Stats) shows that businesses sold with the help of an investment banker or M&A Advisor typically sell for a multiple of 1.5-2x higher EBITDA (27% – 36% higher than the 2023 average middle market multiple paid).    Is the 27-36% higher purchase price worth the 2-5% average fee paid to an advisor?  The math suggests it very much is.   

Reality: Professional advisors are invaluable in maximizing the sale price, avoiding costly mistakes, and managing the complexities of the transaction. 

4. “I should sell when I’m ready to retire.” 

Waiting until you’re ready to retire might seem logical, but it can limit your options. Selling a business when you’re no longer interested in being involved with it could result in a lower valuation.  Buyers who are willing to accept a quick or defined transition from an active owner know they are part of a select audience.  When buyers understand they are part of a select audience, it usually impacts their willingness to pay a significant premium.   

Reality: The best time to sell is when your business is performing well, and you have some time and effort you are willing to share with the new owner, not when you’re emotionally or physically ready to leave. 

5. “The buyer will handle the transition.” 

If retirement is a ‘must’ as part of selling a business, we find that some sellers initially believe their role ends once the business is sold. However, buyers often expect the seller to stay involved during a transition period to ensure a smooth handover. This could range from weeks to several months or longer, depending on the complexity of the business. 

Reality: Be ready to provide the buyer with training, client introductions, and operational support during the transition period. 

6. “Only struggling businesses are hard to sell.” 

Owners of profitable businesses often assume their sale will be straightforward. However, even successful businesses can face challenges when being marketed for sale.  Buyers can find unique rationales that inflame skepticism:  geopolitical risk, economic risk, industry cycle, technology or product obsolescence, dependence on the owner, and state of systems and admin functions are a few such areas we often see as points or items that can weigh on valuation during the negotiations we have on behalf of our clients.  

Reality: Every business, regardless of its financial performance, must address potential buyer concerns to ensure a successful sale. In the current market, buyers conduct extensive diligence, and it behooves sellers to be well prepared, with mitigants to common concerns in hand, going into the sale process. 

7. “My financial records are good enough.” 

Many business owners assume their financial records will suffice, only to find that buyers demand far greater detail during due diligence. To be sure, buyers expect clean, well-documented financials that align with tax filings and demonstrate consistent performance, but this is merely a start or basis for which they will form their opinion of value.  Most buyers who are willing to invest the hefty sums of capital to complete a deal will also investigate other cross-functional areas such as IT, HR, Environmental, legal, industry, insurance, and org chart adequacy 

Reality: Professional financial preparation, in addition to the numerous applicable cross-functional areas within your business, can build buyer confidence and streamline the sale process. 

8. “The highest offer is the best offer.” 

The purchase price is just one component of a deal. Transaction structure, timing, earnouts, working capital adjustments, legal representations and warranties, and post-closing obligations can significantly impact the actual proceeds and risk to the seller. A higher offer may come with unfavorable terms, such as a large portion of the price tied to performance-based earn-outs or deferred payments or a definitive purchase agreement that shifts the burden of post-close risk to a seller. Additionally, the buyer’s ability to close the deal and their strategic fit with your business should also be considered. 

Reality: Evaluate offers holistically, considering payment terms, contingencies, and the buyer’s credibility. Sometimes, a slightly lower offer with better terms and a reliable buyer can be the smarter choice. Experienced advisers will contribute valuable insights to evaluate offers. 

9. “Once we sign a letter of intent, the deal is done.” 

Signing a Letter of Intent (LOI) is an important milestone, but it doesn’t guarantee the deal. Approximately 30% of deals fall apart between the LOI and closing. The most common causes are due diligence findings, renegotiation attempts, and financing issues.  

Reality: The LOI is just the beginning of the process. Expect continued effort and negotiations until the deal is finalized, and be prepared to address challenges that arise along the way.  

10. “I’ll be set for life after the sale.” 

Many owners assume selling their business will generate enough wealth to secure their future. However, taxes, deal structure (e.g., deferred payments or earn-outs), and ongoing expenses often reduce the net proceeds. 

Reality: Consult financial planners and tax professionals to ensure you understand the post-sale financial implications and plan accordingly. Sellers can use a number of tax deferral strategies, but they generally must be implemented well before beginning the sale process. 

Selling a business is a complex and nuanced process, particularly for middle-market businesses. By dispelling these myths and understanding the realities of the sales process, business owners can better position themselves for success. Engaging qualified M&A advisors early in the process, preparing thoroughly, and setting realistic expectations are key steps to achieving a rewarding exit.