After two years of deal uncertainty, the lower middle market (LMM) has snapped back with a vengeance. Buyers, including private equity firms, independent sponsors, and search funds, are racing to secure quality deals, but competition has never been more intense.

According to recent Q1 2025 data, there are now over 1,000 active LMM PE buyers, up from just 300 a few years ago. That means the race to find proprietary deals is fierce, and traditional sourcing methods (cold outreach, broker networks, referrals) aren’t cutting it anymore.

Here’s why the winners in 2025 are rethinking their sourcing strategy:

1. Speed and Scale Are Non-Negotiable

Manual outreach doesn’t scale, and in a market where first-mover advantage matters, waiting for a broker to send you a teaser could cost you the deal. Tech-enabled platforms like OutSearched give buyers a 52x increase in outbound volume over traditional sourcing methods.

2. Sellers Are More Selective

Many LMM business owners are first-time sellers. They’re looking for buyers who can move quickly, have a strategic rationale, and offer certainty of close. Getting in front of them early (before a formal process starts) is key.

3. Proprietary Deal Flow Is the New Gold

In a market flooded with buyers, the best deals don’t go to the highest bidder. They go to the first serious conversation. Building direct, off-market relationships with motivated sellers gives buyers pricing power and negotiation leverage.

4. The Buyer's Edge is Shifting

It’s no longer just about having dry powder. Buyers that leverage data, tech, and automation to identify and qualify leads are now closing more deals, faster, and at better multiples.

Key Takeaway:

2025 is shaping up to be a record year for LMM activity, but only for buyers who are ready to proactively source and move fast. Waiting for deals to come to you isn’t a strategy. It’s a risk.

Platforms like OutSearched are purpose-built for this moment, connecting buyers to high-intent sellers faster, more efficiently, and more cost-effectively than ever before.