64% of lower middle market dealmakers expect valuation multiples to hold steady through H2redactedAnd 57% say valuation expectations were the biggest reason deals failed to close in the first half, more than double the 28% recorded forredactedThese figures come from a recent Axial survey. What The Survey Found - Supply is at a record: Axial recorded 3,523 deals coming to market in Q2 2026, its highest quarterly total. A combined 87% of respondents expect activity to hold steady or increase in the second half, and 3% expect a decline. - Buyers have not left: 73% still expect to hit the acquisition targets they set in January. - Valuation is now the binding constraint: 42% of buyers named valuations as the leading obstacle to deploying capital, double the 21% recorded in the Q1 survey. Limited quality deal flow followed at 40%. - Fewer buyers are refusing to stretch: Buyers willing to stretch for a high-quality asset held at 45%, against 48% in Q1. What Is Moving Instead - Respondents noted that stable headline multiples can mask changes in deal structure, including greater use of seller financing, earnouts, and holdbacks. - The multiple is not moving. What is moving is how much of it arrives by wire on closing day. Two offers at the same headline multiple can differ by hundreds of thousands of dollars in cash at close, and a seller ranking offers by multiple alone will take the wrong one. Three Findings Behind Most Valuation Gaps The gap between a seller's 5.5x and a buyer's 4.75x usually comes down to three findings: - Add-back quality: Adjustments the seller treats as obvious and the lender will not fund. - Concentration: Revenue resting on relationships that belong to the exiting owner. - Working capital: A peg the seller has never modelled and discovers at funds flow. All three are measurable before a process launches. None is negotiable after an LOI is signed. What This Means For A Seller Supply is at a record, buyers are funded, and headline pricing is stable. What is scarce is agreement on the number. Sell-side diligence completed before the CIM goes out does not raise the multiple. It removes the arguments that take 0.5x out of it during exclusivity, and it protects the cash portion, which is where the money actually is.