Sell-Side Timing: Reading the Middle-Market M&A Cycle

The single most common question we hear from founders is some version of: is now a good time to sell? It is the right question. It is almost never answered correctly by looking at the public equity indices.

The middle market — transactions roughly $10 million to $500 million in enterprise value — operates on a cycle that overlaps with, but is not identical to, public markets. Three signals matter far more than the S&P 500 when deciding whether to run a process in the next twelve months.

Middle-market M&A is a leveraged buyer's market. Roughly two thirds of transactions in the $50–$500M range are executed by private equity, and every one of those deals is priced with debt. When senior leverage is available at 4.0x–5.0x EBITDA at reasonable spreads, multiples clear at premium levels. When debt tightens, sponsor buyers pull back and strategics recover pricing power — usually at lower multiples for sellers.

The practical read: watch the private credit market and the LBO leverage league tables, not the ten-year Treasury in isolation. When leverage is available, sellers of quality assets win.

U.S. private equity has been sitting on unprecedented dry powder for several years. That capital carries a clock — funds have investment periods, and limited partners expect deployment. When large vintages approach the end of their investment window, sponsor competition for platform and add-on assets intensifies, and multiples move up.

The 2020–2022 fund vintages are entering exactly this window. For sellers of well-positioned businesses, that is a tailwind through 2027.

The most reliable timing signal is internal. A business that has just posted its best year in three, has visibility into another strong year, and has resolved the obvious concentration or key-person issues is a business that is ready to go to market — regardless of what the macro headlines say.

Conversely, a business coming off a soft year, with a lumpy pipeline and a founder who has not yet built a second-in-command, will trade at a discount in any market. The single largest driver of a founder's after-tax proceeds is not the month they launch a process — it is the twelve to eighteen months of preparation before it.

Sell when your business is ready and the debt market is open. Do not wait for the market to reach a peak — nobody rings a bell at the top. Do not sell into a broken debt market unless you have to. Everything else is noise.