Wall Street vs. Main Street: Private Markets Recap

After a few years of rate shocks, inflation whiplash, and underwriting gymnastics, 2025 felt like a year where dealmakers could finally take a full breath… and then immediately remember there’s still plenty to be anxious about (tariffs, labor, supply chains, election-cycle volatility, etc.). That mix of more stability without clarity pretty much defined the year.

The small business M&A market doesn’t move in lockstep with mega-cap M&A headlines, but it does feel the downstream effects: cost of capital, SBA throughput, and consumer confidence.

Below is my attempt to capture:

1. What deal activity looked like on “Wall Street” vs. “Main Street”
2. Some common trends we observed in small business acquisitions
3. What I see in store for 2026
4. And why, despite all of the above, we stay obsessed with the micro rather than focusing exclusively on the macro

Deal Activity on Wall Street

A clear theme from 2025: deal values rose meaningfully, but volumes were more subdued. A classic “megadeals do the heavy lifting” kind of year.

Although most major industry data collectors are still sifting through Q4 numbers, KPMG reported that Global Private Equity investment deal volume rose to $2.1 trillion in 2025, up from $1.8 trillion in 2024.

While that sounds promising for PE practitioners, it comes with an asterisk: deal volume fell ~8% (20,836 deals in 2024 vs 19,093 deals in 2025).

So where'd the value come from? Massive transactions. KPMG counted 22 PE-backed acquisitions with enterprise values north of $5B, totaling $311B in aggregate.

Some notable examples:

• The $55B take-private of Electronic Arts led by Silver Lake and the Saudi PIF
• The $~40B acquisition of Walgreens Boots Alliance by Sycamore Partners and co-investors
• The ~$40B acquisition of Aligned Data Centers by BlackRock

Private equity funds continue to sit on record levels of dry powder; with IPO markets appearing healthier and at least temporary stability in interest rates, private equity firms will continue to face pressure to deploy capital and be active in 2026.

Deal Activity on Main Street

Deal activity on “Main Street” (AKA small business acquisitions) mirrored the broader M&A markets. According to data compiled by BizBuySell, total deal volume was basically flat YoY (+.04%) with a modest 3% increase in total deal value.

Transaction volume slowed in Q1 and Q2 (down 1% and 4% respectively) amid economic and geopolitical uncertainty; it rebounded in Q3 with 8% YoY growth as business buyers and sellers became more comfortable with where the year was heading. Q4 deal volume fell 2% (mostly because of the government shutdown).

The small business acquisition ecosystem is uniquely linked to the activity levels of the Small Business Administration. SBA 7(A) and 504 loans are commonly used to finance transactions of small businesses.

As a reminder: 7(A) loans are general-purpose loans for up to $5M, typically have a 7-10 year term, and carry with them a personal guarantee. 504 loans are typically longer in duration (10-25 years), can be larger ($15-$20M), and are used for real estate or long-lived equipment.

Despite undergoing a dramatic restructuring under the second Trump administration (including a 54% reduction in workforce and 33% budget cut), the SBA was able to deploy a record $100B in capital across 85,000 small businesses, $45B of which was in the form of 7(A) and 504 loans.

Many small business acquisitions rely on SBA financing, so the October government shutdown had a significant impact on transaction volume in Q4. About $5.3B in 7(A) and 504 loans were unable to be delivered to ~10,000 small businesses during the shutdown.

Trends in Small Business Acquisitions

The increasing presence of search funds, institutional investors, and overall professional business buyers joining the mix of small business acquisitions is an oft-cited trend in this sector. As larger transactions have become more costly to finance, institutional buyers have gone further down the chain to find enticing acquisition targets.

And as ETA (Entrepreneurship-through-acquisition) programs have become a focal point of MBA curricula, many graduates are forgoing the traditional management consulting/investment banking paths to instead pursue direct business acquisitions.

44% of the brokers on the BizBuySell marketplace reported an increase in institutional private equity and search fund activity in 2025 (whether or not this is a good thing is beyond the scope of this post, but it has resulted in more competition for deals, and an overall increasing complexity and lengthening of the diligence process).

Regarding sector interest, Service business showed the strongest growth in demand in 2025, with transaction volume up 4% over the past year and median sales price up 5%. Within the Service Sector, Financial Services (+38%), Technology Services (+12%), and Architectural and Engineering Services (+17%) all saw meaningful growth in transaction volume. I’d wager the interest in Service businesses includes a combination of insulation from trade and geopolitical policy and integration into roll-up strategies (driven by the themes of leveraging scale and AI to streamline operations).

Restaurants and Manufacturing businesses saw decreasing interest in 2025. Rising food costs and new immigration policies hurt the restaurant industry, and deal volume fell 5%. Trade policy uncertainty hurt manufacturing businesses and deal volume was down 11% YoY.

What I expect on Main Street in 2026

I anticipate deal volume to be strong in Q1 2026 based on the general sentiment of M&A advisors (80% surveyed forecast higher deal volume in 2026), as well as the fact that the SBA is still probably working through the backlog of deals held up late last year. A stable interest rate environment would bolster this thesis.

As we approach the election cycle later this year, I think deal volume will likely slow as both buyers and sellers wait to learn what their future could look like.

All that being said, I’m going to borrow a quote from Canadian author and educator Laurence Peter (that our CEO, Connor Browne used in one of his blog posts on market timing):

“An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.”

Although it's important to be informed of what's going on in the macro, we’re not letting those predictions dictate the businesses that we buy in our small business acquisition strategy.

Our job isn’t to call GDP prints or time rate cuts; our job is to find durable businesses with real brands and real legacies… the kind that we believe can withstand whatever the economy or the broader private markets throw our way.

That shows up in the questions we obsess over:

• Do customers need this, or merely like it?
• Does the company have pricing power, or just hope?
• Can we underwrite this with a margin of safety, even if growth is mediocre?

The goal isn’t to predict the future; the goal is to buy businesses that can exceed in whatever future shows up (and to invest with enough conservatism that we can remain calm when everyone else gets reactive).

Our aim is to stay disciplined when the headlines are loud (and to keep building when others freeze).

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