IN THIS ISSUE:
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ISSUE
SPRING 2026
© M&A Source. All Rights Reserved. | The insights and opinions expressed herein are those of the authors and do not represent professional counsel nor an endorsement by M&A Source.
The Bridge
UPDATES & INSIGHTS
FOR THE LOWER MIDDLE MARKET
A QUARTERLY PUBLICATION
OF THE M&A SOURCE
Chair’s Letter
M&A Due Diligence: What
Buyers Find—and How
Sellers Can Prepare
What Buyers are Really
Looking for on Behavioral
Health Deals
From Operator to Advisor: The
Mindset Shift That Makes or
Breaks an M&A Advisor
»
»
»
»
NO.13
2 | The Bridge | Spring 2026
Updates + Insights
for the Lower Middle Market
The Bridge | Spring 2026 | 3
Content.
NO.13
ISSUE
SPRING 2026
The Bridge
A QUARTERLY PUBLICATION
OF THE M&A SOURCE
LETTER FROM
THE CHAIR
Look ahead to the 2026 Spring
Conference in Minneapolis as the M&A
Source community prepares to reconnect,
learn, and share new opportunities.
04
FROM OPERATOR TO ADVISOR:
THE MINDSET SHIFT THAT MAKES
OR BREAKS AN M&A ADVISOR
Explore the mindset shift from
operator to advisor and why it can
make or break success in M&A.
08
M&A DUE DILIGENCE: WHAT BUYERS
FIND—AND HOW SELLERS CAN
PREPARE
Discover the key risks buyers identify
during due diligence and how to
proactively address them.
12
WHAT BUYERS ARE REALLY
LOOKING FOR ON BEHAVIORAL
HEALTH DEALS
Discover the key factors driving buyer
decisions in today’s behavioral health
market.
16
4 | The Bridge | Spring 2026
Chair’s Letter
In my last Chair’s Letter, I spoke about
the relationships that make M&A Source
meaningful to so many of us. One of the best
places to see that community in action is at
our conferences, and I’m looking forward to
gathering together for the Spring Conference
in Minneapolis, Minnesota, June 1–3, 2026. If
you’ve attended before, you know the energy
that comes from getting this group of advisors
and investors together in one place. If you
haven’t yet experienced it, Minneapolis will be a
great opportunity to do so.
Our conferences create space for lower-middle-
market advisors and investors to step away
from the day-to-day demands of transactions
and spend time learning from one another. The
educational courses and workshops provide
valuable insight, but just as important are the
conversations that happen between sessions,
over coffee, and at dinner. Those conversations
often turn into lasting relationships and future
deals.
A great deal of work goes into building a
conference that delivers real value to our
members. I want to recognize Bob Latham, our
2026 Conference Planning Chair, along with
the entire Conference Planning Committee. Bob
and his team have put together an outstanding
program that includes a strong lineup of
educational courses, practical workshops, and an
exciting keynote. Their goal is simple: to create
programming that helps members become better
advisors, investors, and dealmakers.
Another highlight of the conference is the Deal
Market. It’s always energizing to see members
sharing opportunities, discussing active
engagements, and exploring ways to work
together. It’s a reminder that the relationships
built through M&A Source frequently turn into
real transactions and partnerships.
If you’re able to join us in Minneapolis, I
encourage you to do so. The conversations,
connections, and opportunities that come from
being in the room are what continue to make this
organization special.
Driving deals. Strengthening connections.
Shaping the lower-middle market.
Jaclyn Ring
M&AMI, CM&AP
Jaclyn Ring
2026 Chair, M&A Source
If you’re able to join us in Minneapolis, I
encourage you to do so. The conversations,
connections, and opportunities that come
from being in the room are what continue
to make this organization special.
Dear Friends and Colleagues,
The Bridge | Spring 2026 | 5
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6 | The Bridge | Spring 2026
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Deal Markets
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2026
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The Bridge | Spring 2026 | 7
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ENTERPRISE VALUE OF MARKET SEGMENTS STUDIED
‹$500K
$500K-$1M
$1M-$2M
MAIN STREET
LOWER MIDDLE MARKET
$2M-$5M
$5M-$50M
Q4 2025 Highlights
AVERAGE OFFERS PER DEAL
2024
2025
MAIN STREET
LMM
2.19
3.89
2.38
3.61
“Owners who are prepared are finding opportunities.
Good businesses are moving. Momentum is building,
but it’s not a rush. 2026 looks more like a continuation
of disciplined dealmaking than a reset to the frenzy
years.”
– Tanya Popov, Founder and Master CBI,
INIX Consulting & Brokerage
SELLER’S MARKET SENTIMENT Q4 2013-2025
$1M-$2M
$5M-$50M
$500K-$1M
$2M-$5M
‹$500K
45%
68%
90%
8 | The Bridge | Spring 2026
From Operator to Advisor:
The Mindset Shift That Makes or Breaks
an M&A Advisor
MANY M&A ADVISORS COME FROM OPERATING BACKGROUNDS. ON THE SURFACE, THAT EXPERIENCE
LOOKS LIKE A CLEAR ADVANTAGE. YOU’VE BUILT BUSINESSES, MANAGED TEAMS, NAVIGATED
GROWTH, AND DEALT WITH REAL PRESSURE. YOU MAY HAVE EVEN SOLD A BUSINESS OR TWO
YOURSELF. YOU UNDERSTAND WHAT IT TAKES TO RUN A COMPANY, AND THE EMOTIONAL WEIGHT
THAT CAN COME WITH STEPPING AWAY FROM SOMETHING YOU BUILT.
By Chuck Mullins
MANAGING DIRECTOR, QUIET LIGHT
CM&AP, M&AMI, CBI
That experience matters. But it can also create friction in
ways that aren’t immediately obvious.
Some of the most capable operators struggle when they
first transition into advisory roles. Not because they lack
knowledge, but because they approach the role the same
way they approached running a business. What makes you
effective as an operator does not always translate into what
makes you effective as an advisor.
One of the biggest hurdles in that transition is ego. As an
operator, you’re the focal point. Decisions run through you.
Conversations revolve around your perspective, your strategy,
and your execution. That’s not a flaw. It’s how the role works.
In a transaction, that dynamic shifts. The conversation is no
longer about you. It’s about the buyer and the seller, and your
role is to guide that interaction so it stays productive, focused,
and effective. You still need to support the conversation, but
you have to let it belong to them so they can build trust.
That shift can be harder than it sounds. It certainly was for me.
The Ego Trap: “I Know a Better Way”
Operators are trained to solve problems. If something is
inefficient, you fix it. If a strategy is underperforming, you
change it. Speed and decisiveness are strengths.
The Bridge | Spring 2026 | 9
That instinct doesn’t turn off when you move into an advisory
role. It just shows up in more subtle ways.
You find yourself wanting to improve the business before
going to market. You push harder than necessary on
operational changes. You catch yourself thinking, “If this were
my business, I’d do it differently.”
Operational insight is one of the real advantages former
operators bring to this role. In the context of exit planning,
where you’re working with a client months or years in
advance, thoughtful guidance around improving the business
can meaningfully impact value.
But timing matters. If a seller is preparing to go to market,
shifting into fix mode often creates more disruption than
benefit. At that stage, the focus should be on positioning, not
rebuilding.
Sellers can feel that.
It doesn’t usually come across as helpful. It comes across as
second-guessing, or worse, as if you believe you know how to
run their business better than they do. Even when your intent
is to help, it can create distance and erode trust.
This isn’t about arrogance. It’s about defaulting to the mindset
that made you successful as an operator.
The problem is that it pulls you out of the advisor role and
back into the operator seat.
The Shift: From Control to Alignment
The transition from operator to advisor requires a fundamental
shift in how you define success.
As an operator, your job is to optimize the business. You are
responsible for outcomes, and you have the authority to make
decisions that drive those outcomes.
As an advisor, your job is to optimize alignment between the
business, the seller, and the market. You are not the decision-
maker. You are the guide.
That distinction matters.
You stop trying to fix every imperfection in the business.
Instead, you focus on helping the seller understand how
buyers will perceive those imperfections. You help them
evaluate trade-offs. You give them the context they need to
make informed decisions, even if those decisions aren’t the
ones you would make.
Those imperfections are not just risks. They are often where
the opportunity lives. A business that has room to improve
gives a buyer a clear path to create value after closing. In
many cases, that’s more compelling than a business that
appears fully optimized, because it answers the question
every buyer is asking: where do I grow from here?
Your role is to help the seller see their business through that lens,
not just as something to clean up, but as something to position.
I often tell sellers that selling a business is very different than
selling a house. Most people haven’t sold a business before,
but almost everyone has bought or sold a home, so that’s
the reference point they default to. The problem is that the
comparison breaks down quickly. Homebuyers typically want
something move-in ready. Business buyers are almost always
looking for a business they can improve and grow.
There’s also a timing element. When working through
valuations, sellers will often say they want to make one or
two quick changes to clean things up before going to market.
What they don’t realize is that by doing so, they may remove
the very opportunity a buyer would have valued without giving
those improvements enough time to show up in the financials.
If those changes are going to be made, they need to happen
months in advance, not weeks. Otherwise, you risk removing
the upside without capturing the value those changes create.
Part of the reason for that comes down to the type of change
you’re making. Improvements tied to revenue growth or margin
expansion need time to show up in the financials if you expect
to capture their value. Making those changes weeks before
going to market rarely moves the needle.
On the other hand, items tied to transferability and saleability,
such as reducing key person risk, cleaning up processes, or
improving documentation, can often be addressed quickly
ahead of going to market. They don’t necessarily increase
earnings, but they can increase buyer confidence and reduce
friction during diligence.
You’re no longer the quarterback. You’re the translator
between what the business is and how the market values it.
10 | The Bridge | Spring 2026
Where the Transition Breaks Down
This shift tends to break down in a few predictable areas:
Valuation conversations.
Operators want to be right. Advisors need to get to alignment.
When a seller pushes back on valuation, the instinct is to
defend the number, to prove it. But defending a number rarely
changes anything.
What actually shifts expectations is helping the seller
understand how buyers are likely to behave at that price point.
How many will engage. How they’ll structure the deal. What
conditions they’re likely to attach.
The goal isn’t to win the argument. It’s to make the market’s
response feel real before it happens, so the decision feels
informed, not forced.
Process patience.
Operators are wired for speed. Deals require sequencing.
Going to market before the narrative is clear, the materials
are ready, or the seller is prepared to answer tough questions
often creates avoidable friction later in the process.
Buyer interactions.
Operators tend to over-answer. They explain every detail,
defend decisions, and fill in gaps that didn’t need to be
addressed.
In a sale process, more information is not always better if it
isn’t framed correctly.
A better approach is to anticipate the majority of the questions
a buyer will have and address them upfront, on your terms.
That allows you to shape the narrative rather than react to it.
It also means getting uncomfortable topics on the table early.
Every business has flaws. Addressing them proactively gives
you the opportunity to frame them, rather than leaving them
to be uncovered later without context.
Preparing sellers in advance is part of that process. Asking the
right questions before going to market allows them to think
through how they’ll respond, and gives you the ability to help
shape answers that are both accurate and aligned with the
broader story.
Letting an imperfect business go to market is one of the
hardest adjustments for former operators. Not every issue
needs to be fixed. In many cases, trying to clean everything
up delays the process without meaningfully improving the
outcome.
What Actually Builds Trust
The most effective advisors don’t prove their value by
showing how much they know. They demonstrate it through
how they guide conversations.
Instead of telling a seller what they should do, they frame
how the market will respond. Instead of pushing for a
specific decision, they walk through the implications of each
option.
That might sound like:
“Here’s the risk a buyer is likely to focus on, and here’s
how it typically shows up in diligence. If it impacts value
and we have time, we can address it and capture the
upside. If not, we’re better off positioning it appropriately.
If it’s more about transferability, we can often address it
quickly ahead of going to market and focus on reducing
friction during diligence.”
That approach does two things. It builds trust, and it keeps
the seller in control of the decision-making process.
The most effective
advisors don’t prove
their value by showing
how much they know.
They demonstrate it
through how they guide
conversations.
The Bridge | Spring 2026 | 11
Strong advisors know when to step back and when to step
in. In buyer-seller conversations, your role is not to dominate
the discussion, but to guide it. You’re there to keep things
productive, ensure key points are covered, and help both
sides move toward clarity.
That doesn’t mean being passive. Many newer advisors swing
too far in that direction. They’ve been told to let the buyer and
seller build rapport, and they take that too literally.
The goal is to allow that rapport to develop while making sure
the conversation stays clear and effective. When you sense
that something is getting lost in translation, or that one side
isn’t fully understanding the other, that’s when you step in.
When you get that balance right, the relationship forms
directly between the buyer and the seller, with you supporting
it rather than sitting in the middle of it.
Presence without interference.
The Real Advantage
Operating experience is still one of the most valuable assets
an advisor can have. It gives you pattern recognition. It gives
you credibility. It allows you to understand nuance that others
might miss.
But it only becomes a true advantage after the mindset shift.
The best advisors understand how businesses actually run,
but they don’t feel the need to prove it in every conversation.
They know when to lean in and when to stay out of the way.
They focus less on being right and more on helping their
clients navigate the process effectively.
They’ve been there and done that. They’ve been on the
emotional rollercoaster from every seat, as the operator, the
seller, and the advisor, and they know what’s coming next.
That allows them to proactively prepare a seller for the turns
ahead, rather than reacting to them in real time.
The moment you stop needing to be the smartest operator
in the room is usually the moment you become the most
effective advisor.
Chuck Mullins
Managing Director
CM&AP, M&AMI, CBI
ON-DEMAND COURSE
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12 | The Bridge | Spring 2026
FOR MANY BUSINESS OWNERS, THE MOST STRESSFUL PART OF SELLING A COMPANY ISN’T FINDING A
BUYER—IT’S SURVIVING DUE DILIGENCE. THIS IS THE PHASE WHERE DEALS SLOW DOWN, VALUATIONS
CHANGE, AND TRANSACTIONS SOMETIMES FALL APART ENTIRELY.
By the Horizon M&A Advisors Team
M&A Due Diligence: What Buyers Find
—and How Sellers Can Prepare
The Bridge | Spring 2026 | 13
Understanding what buyers look for in due diligence is one
of the most powerful advantages a seller can have. Buyers
don’t enter due diligence hoping to kill a deal—but they do
use it to confirm value, uncover risk, and decide whether
the price and terms still make sense.
This guide explains what buyers actually find during due
diligence, the red flags that raise concerns, and how sellers
can prepare properly to protect valuation and close with
confidence.
What Is M&A Due Diligence—From a Buyer’s Perspective
M&A due diligence is the buyer’s process of validating
everything that was represented before signing the LOI.
It goes far beyond reviewing financial statements. Buyers
examine financial integrity, operational maturity, legal
exposure, customer stability, and management readiness.
In practice, what buyers find in due diligence determines
three outcomes:
• Whether the deal closes
• Whether valuation is adjusted
• Whether terms become more seller- or buyer-friendly
Due diligence is not about perfection. It’s about risk visibility.
What Buyers Look for in Due Diligence
Buyers evaluate businesses across multiple dimensions. While
the scope varies by deal, most buyers focus on a consistent
core set of issues.
They want to confirm that:
• Financials are accurate and sustainable
• Revenue is real, repeatable, and defensible
• Risks are known, manageable, and priced in
• Operations can scale without disruption
• Management can run the business post-sale
This is why sellers who understand M&A due diligence for
sellers often experience smoother processes and fewer
surprises.
The Due Diligence Red Flags Buyers Notice Immediately
Some issues raise concern the moment buyers enter
diligence. These due diligence red flags don’t automatically
kill a deal—but they almost always trigger deeper scrutiny.
Common red flags include:
• Inconsistent or unclear financial reporting
• Aggressive add-backs or unsupported EBITDA
adjustments
• High customer concentration
• Poor contract documentation
• Undocumented processes or founder dependency
• Unresolved legal, tax, or compliance issues
When buyers uncover multiple red flags, confidence erodes—
and so does leverage.
Due Diligence Issues That Kill Deals (or Trigger Re-Trading)
Not all findings are equal. Some due diligence issues that kill
deals outright, while others lead to deal re-trading after the
LOI.
The most damaging issues typically involve:
• Quality of earnings issues (revenue recognition, inflated
margins, one-off revenue treated as recurring)
• Misstated profitability
• Hidden liabilities or pending litigation
• Weak customer retention or undisclosed churn
• Inability to verify key assumptions
Even when deals survive, these findings often result in risk
adjustments in valuation, such as:
• Lower purchase price
• Escrows or holdbacks
• Earn-outs replacing cash
• Stricter representations and warranties
Understanding the due
diligence impact on
valuation helps sellers
move from defense to
control.
14 | The Bridge | Spring 2026
This is where many sellers feel blindsided—because they
didn’t anticipate how diligence would impact valuation.
Due Diligence Impact on Valuation: What Sellers Miss
Visual Concept: Valuation Impact Flow
Concept: Risk discovered → Buyer concern → Price
adjustment → Deal structure change.
Due diligence doesn’t just validate numbers—it reshapes
them. Buyers use findings to recalibrate risk and return
expectations.
When diligence reveals uncertainty, buyers respond by:
• Lowering valuation multiples
• Reducing upfront cash
• Shifting risk back to the seller
• Extending closing timelines
In contrast, well-prepared sellers often see:
• Faster diligence cycles
• Minimal re-trading
• Stronger buyer confidence
• Better final terms
Understanding the due diligence impact on valuation helps
sellers move from defense to control.
How Sellers Should Prepare for M&A Due Diligence
The best time to prepare for diligence is before you go
to market—not after the LOI is signed. Preparing for due
diligence is really about removing uncertainty.
Effective seller readiness for due diligence includes:
• Cleaning and normalizing financials
• Preparing a clear quality-of-earnings narrative
• Documenting customer contracts and revenue sources
• Identifying and addressing concentration risks
• Organizing legal, tax, and compliance documents
• Building a professional data room
This approach turns diligence into confirmation rather than
investigation.
A Practical Buyer Due Diligence Checklist (Seller View)
From a seller’s perspective, a buyer due diligence checklist
typically covers:
• Financial statements and EBITDA reconciliation
• Revenue breakdowns and customer analytics
• Contracts and obligations
• Tax filings and compliance records
• Employee structure and incentives
• Operational systems and SOPs
• Growth assumptions and forecasts
Preparing these items early reduces friction and keeps
momentum on your side.
Business Sale Due Diligence Is About Readiness,
Not Perfection
Every business has imperfections. What matters is whether
those issues are:
• Known
• Quantified
• Explained
• Priced appropriately
Buyers are far more comfortable with transparent risks than
with surprises. Sellers who understand how to prepare for
M&A due diligence are far less likely to face last-minute
renegotiations or failed deals.
Ready to Prepare for Due Diligence—Before Buyers
Find the Gaps?
If you’re planning a sale, the smartest move is to assess
readiness before entering the market. A professional
diligence-readiness review can help you:
• Identify potential red flags early
• Understand valuation risks
• Strengthen your negotiation position
• Reduce the chances of deal re-trading
Contact us to prepare Due Diligence for your business.
The Bridge | Spring 2026 | 15
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16 | The Bridge | Spring 2026
Fueled by rising demand, favorable reimbursement
dynamics, and increased investor interest, Behavioral
Health has experienced rapid growth across segments
such as autism services (ABA), substance use
treatment, and outpatient mental health.
But as the market matures, buyers are becoming
significantly more disciplined. In today’s environment,
deals are won on documentation, compliance
infrastructure, and the sustainability of earnings.
This shift is playing out in real time across transactions,
where the gap between high-quality operators and weaker
ones is becoming increasingly clear during diligence.
OVER THE PAST SEVERAL YEARS, BEHAVIORAL HEALTH HAS BECOME ONE OF THE MOST ACTIVE
SECTORS IN HEALTHCARE M&A. I JOINED AMERICAN HEALTHCARE CAPITAL IN 2019 AND HAVE SEEN
THE SPACE GO FROM THE WILD WEST TO A MATURE AND SUSTAINABLE INDUSTRY.
By Sam Fuhrer
MANAGING DIRECTOR
AMERICAN HEALTHCARE CAPITAL
What Buyers are Really Looking for
on Behavioral Health Deals
When I first started working with business owners in the
behavioral health sector, buyers were mostly focused on
growth and scalability. The thesis was straightforward:
demand for behavioral health services was increasing;
reimbursement was strong, and fragmented markets
offered opportunities for consolidation.
As a result, many transactions were underwritten based
on growth trajectories, expansion opportunities, and the
ability to professionalize operations post-acquisition.
Buyers are still attracted to the sector, but that approach
has evolved. Now the focus has shifted toward
understanding whether a business can withstand scrutiny
The Bridge | Spring 2026 | 17
from lenders, regulators, and internal compliance teams.
Growth alone is no longer enough. The question now is
whether that growth is durable, and looking at corporate
compliance as an investment rather than an additional cost.
If I owned a behavioral health business and was looking to
go to market in 2026, this is what I would be focused on.
I would make sure the financial records for the trailing 3
years are accurate and well-documented. I would evaluate
the sustainability of my EBITDA and add-backs. I would
100% invest in a compliance system and process. I would
strengthen my management team beyond just me and
the other founders and I would make sure my billing and
documentation was stellar.
Growth alone is no
longer enough.
These steps not only improve the likelihood of a
successful transaction, but also help maximize value by
reducing uncertainty for buyers.
Behavioral health remains a high-growth sector with
significant opportunity. But it is no longer a market where
growth alone can carry a transaction.
The next phase of the industry will be defined by discipline
in operations, compliance, and financial reporting. For
buyers, this means a more structured and rigorous
approach to underwriting risk. For sellers, it means
building businesses that can stand up to that scrutiny.
And for the market as a whole, it represents a natural and
necessary evolution from rapid expansion to sustainable
growth.
Sam Fuhrer
Managing Director
American HealthCare Capital
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