Lower Middle Market M&A: Key Credit and Deal Trends Driving LBO Activity

By John J. Koeppel

November 9, 2025 | Corporate Blog
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Highlights from a CreditSights article on Lower Middle-Market (LMM) deals: 

  • Extensive LMM deal and credit activity currently happening, especially sub $50m enterprise value 
  • Less relative leverage in this segment, with tighter covenants 
  • If senior-only debt, often in the +/-2.0x adj EBITDA range 
  • 40% of all deals in this segment are add-on transactions 
  • Substantial tax structuring advantages (i.e., QSBS) in this segment 
  • “With so many business owners looking to transition out in the coming years, and a strong ecosystem of private equity, independent sponsors, and other buyers in this space, these [LMM] deals will continue to play a key driver in the overall LBO / M&A ecosystem.”

John Koeppel is quoted & comments on highlights from the article: "US Insight: Despite perceived risks, lower middle-market deal volume leads M&A revival" by Krista Giovacco, Oct. 20, 2025.

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