Axial's First Study of Add-on Activity Quantifies the Growing Role of Private Capital in the Lower Middle Market


Axial, the online M&A platform connecting buyers, M&A advisors, and sellers of small and medium-sized businesses, recently released its inaugural Lower Middle Market Add-On Report, based on a survey of 150 buy-side deal professionals across the Axial network. The report reveals the metric, methods, and extent to which financial sponsors are transacting in the lower middle market to power their add-on growth strategies.

Download The Lower Middle Market Add-On Report

"As we've watched the overall M&A market continue to bifurcate in 2022, with lower middle market deal flow holding steady while the rest of the market tapers, the question that has emerged is, why?" says Peter Lehrman, CEO and Founder of Axial. "It seems that add-on activity in the lower middle market has become a significant stabilizing force on valuations, as sponsors of all sizes have turned their focus increasingly to the add-on growth strategy. And the add-on report forecasts that it will continue throughout 2022."

80% of investors surveyed indicated that the pace of add-on transactions will accelerate in 2022, with the remaining 20% predicting that activity would hold steady. As for motivations, 55% of respondents cited the demand for scale or geographic expansion as the primary driver of these deals, followed by 30% who said it was the addition of products or capabilities, 18% focused on adding talent, 13% on multiple arbitrage opportunities and 7% on cutting costs. The report also includes additional color and commentary from deal professionals participating in the survey, including the challenges in executing add-on strategies, expected changes in deal volume, valuation expectations, predictions about what's coming for add-ons in the event of a market downturn and more.

"While the lower middle market has always been one of the more dynamic segments of the broader M&A universe, the growth of add-on activity represents yet another factor that reinforces the strength and vibrancy of this market," says Dani Forman, Director of Research at Axial. "And while it's impossible to know what the future holds, as organic growth becomes harder and harder to find, growth through acquisitions will likely become that much more important as a means to drive growth and investment returns in the lower middle market."

About Axial

Axial is the online M&A platform for buyers and sellers of small and medium-sized businesses. The company's pioneering deal sourcing and deal marketing platform is trusted by professional buyers, M&A advisors, and business owners to source opportunities, confidentially and digitally exchange critical deal information, and quickly assess the quality and reputation of potential deal partners. For more information on Axial, visit

For press or business inquiries: 
Dani Forman, Director of Research
Axial |


Source: Axial


Categories: Mergers and Acquisitions

Tags: Business Brokers, Finance, lower middle market, M&A, Mergers & Acquisitions