Business Brokers and M&A Intermediaries: Market Structure

Who intermediates a sale: the tiers

Intermediated sales of private businesses under $50 million in value are handled by three broad kinds of firm. The labels overlap, and a firm's title says little about the deal it is running, but the tiers are useful for reading the public data.

The segment boundaries in the first two rows come from the IBBA Market Pulse Q2 2026 highlights, which group "Main Street" as the three segments under $2 million and the "Lower Middle Market" as $2M-$5M and $5M-$50M, measured by enterprise value. The survey release itself describes its scope as businesses being sold "up to $50M" ^[1].

The International Business Brokers Association (IBBA) says it was formed in 1984, has more than 3,000 members and is "the largest international not for profit association for business brokers" ^[1]. Membership is voluntary, so the association's count is not a census of firms that broker businesses.

Docket's glossary entry on the business broker covers the definition. This article covers structure and data quality: who sits where, what the law permits each tier to do, and what the two recurring public datasets measure and leave out. How to work broker relationships day to day is covered in business broker networks.

The legal boundary: M&A brokers under Exchange Act 15(b)(13)

When a business is sold through its securities, an intermediary paid to effect the sale faces a broker-dealer registration question. Congress answered part of that question in the Consolidated Appropriations Act, 2023 (Pub. L. 117-328, div. AA, title V, § 501), which added a registration exemption for "M&A brokers" at 15 U.S.C. 78o(b)(13). The amendment took effect 90 days after its December 29, 2022 enactment ^[2]. This section describes the statute; it is not legal advice, and state securities and licensing rules are a separate question for counsel.

Who is covered. An M&A broker effects securities transactions "solely in connection with the transfer of ownership of an eligible privately held company," for either buyer or seller, and must reasonably believe the acquirer will control the company and be active in its management ^[2]. The statute presumes control at 25 percent or more of a class of voting securities, or 25 percent of capital in a partnership or LLC.

The size test. An "eligible privately held company" has no securities registered with the SEC and, in the fiscal year before the broker is first engaged, meets either or both conditions ^[2]:

• EBITDA "less than $25,000,000"; or
• gross revenues "less than $250,000,000".

Excluded activities. The exemption is lost if the broker, among other things ^[2]:

• receives, holds, transmits or has custody of the funds or securities exchanged;
• provides financing for the transfer, directly or through an affiliate;
• arranges third-party financing without complying with applicable law and disclosing its compensation in writing;
• represents both sides without written disclosure and written consent from both;
• facilitates a deal with a buyer group it helped form, or a transfer to a passive buyer or group of passive buyers;
• binds a party to the transfer.

Brokers barred or suspended from association with a broker-dealer are disqualified.

Are the dollar figures still current? The statute adjusts both figures by the BLS Employment Cost Index "on the date that is 5 years after December 29, 2022, and every 5 years thereafter," rounded to the nearest $100,000; the SEC may also modify them by rule ^[2]. The first scheduled adjustment therefore falls on December 29, 2027. As of October 28, 2026, a search of SEC documents in the Federal Register since enactment for "merger and acquisition brokers" returned only three FINRA capital acquisition broker (CAB) notices, and no SEC rule or proposed rule changing the figures ^[3]. The $25,000,000 and $250,000,000 figures are the enacted 2022 numbers.

Where registered firms fit. The SEC order approving FINRA's CAB rule amendments, published February 13, 2026, records that SEC staff withdrew the 2014 M&A Brokers no-action letter once the statutory exemption took effect, and that the amended CAB rule lets a CAB effect M&A transactions "to the same extent as an exempt M&A Broker under the M&A Brokers Exemption" ^[4]. Deals outside the exemption, such as those involving passive buyers or the intermediary arranging financing, sit with registered broker-dealers.

For a buyer, the practical reading is narrow: an intermediary's exemption is the intermediary's problem, but a structure that needs the intermediary to hold funds, finance the deal or bring passive investors moves it outside the exemption.

What BizBuySell reports and what it can't

BizBuySell's Insight Report is the most cited quarterly read on Main Street sales. The current page is headed only "Q3"; its report archive lists it as the 2026 third quarter, and its year-over-year comparisons use "revised Q3 2025 figures." The figures below are that report's, quoted as published.

Volume and price. "A total of 2,132 businesses changed hands during Q3, essentially flat from the previous quarter and down 7% from the same quarter last year." The median sale price "rose 17% year-over-year to $350,000," and BizBuySell itself says this "partly reflects a shift in deal mix rather than rising prices across the board."

The $1 million split. Businesses selling for more than $1 million "made up 22% of Q3 transactions, the highest share on record." Above $1 million the median sale price was $1.8 million and the average cash flow multiple 3.73x; below it, $250,000 and 2.30x.

Buyers and financing. Brokers named SBA financing "the most common financing obstacle of the quarter, cited by 38%, ahead of interest rates at 34%," and "reported seeing more search fund operators (32%), private equity firms (31%) and family offices (20%) than a year ago." Among buyers surveyed, 31% named finding a quality business as what was holding them back.

Method. The report is "based on approximately 50,000 businesses for sale and those recently sold," and "closed transactions are reported to BizBuySell.com on a voluntary basis by business brokers nationwide" ^[5].

What the dataset cannot show:

• Unbrokered and off-platform sales. Only broker-reported closings enter the count. Owner-to-owner sales, sales to employees and sales run by firms that do not report are absent.
• A market total. 2,132 is the number of reported closings, not the number of U.S. small-business sales.
• Like-for-like price change. The publisher attributes part of the median price rise to mix. A rising median does not show that a given business is worth more.
• Buyer shares. The 32%, 31% and 20% are broker survey responses about seeing more of a buyer type, not shares of closed deals won by those buyers.

What IBBA / M&A Source Market Pulse reports

The Market Pulse is a quarterly survey run by the IBBA and M&A Source. The Q2 2026 edition "was conducted July 1-15, 2026 and was completed by 255 Business Brokers and M&A Advisors. Respondents completed 181 transactions this quarter. This is the 57th edition of the report" ^[1].

Headline findings, quoted from the release:

Three details matter when using these numbers.

Different earnings bases. The highlights PDF states that multiples for the under-$500K to $2M segments are expressed on SDE (seller's discretionary earnings) and $2M-$50M on EBITDA. A Main Street multiple and a lower-middle-market multiple are not on the same denominator.

Median or average. The release's summary bullet says "Median timelines varied from six to 10 months," while its time-to-close section says transactions "averaged" six to 10 months. Treat the timeline as a range reported by segment, not as a precise statistic.

Sentiment versus activity. The PDF's sector chart of net buyer interest is labeled a "one-time advisor sentiment question; not completed transaction activity." It shows where advisors think interest is moving, not where deals closed.

What Pepperdine adds

Pepperdine Graziadio Business School's annual Private Capital Markets Report widens the lens beyond intermediaries. The 2026 report, free to download, surveys lenders, investors, appraisers, brokers and other private capital market participants. Its appraiser respondents report a median discount for lack of marketability (DLOM) of 15%; its private equity respondents report median required returns of 20% for a $1M-EBITDA company, 25% at $5M and $10M, and 19% at $50M, and a median expected IRR of 20% on completed buyouts in the $1M-$4.99M EBITDA band ^[6]. The private equity sample is 38 respondents, so the size pattern is thin.

Those benchmarks describe what capital providers say they require, which is a different question from what brokers report closing. Read alongside the Market Pulse, they let a buyer compare a broker's view of a segment with the return hurdles investors state for the same size band.

Reading the data: coverage and selection bias

Each dataset is shaped by who chooses to report. Neither is a random sample of U.S. business sales.

Checklist before quoting either source:

• Name the period and edition. The two reports above cover different quarters.
• Say whether a figure is a median, an average or a survey share.
• Say whether a multiple is on SDE, EBITDA, cash flow or revenue.
• Separate closed-deal data from sentiment questions.
• Check whether the publisher flags a mix effect or a revision (BizBuySell revised its Q3 2025 base).
• Do not convert a reported count into a market size.
• Do not compare a sub-$2M SDE multiple with a $5M-$50M EBITDA multiple as if they measured the same thing.

What it means for proprietary versus intermediated sourcing

The public data support one modest conclusion: competition in intermediated processes rises with deal size. In the Market Pulse, deals under $500,000 "frequently receive just one or two offers," while 87% of deals over $5 million drew at least three and 33% drew ten or more ^[1]. BizBuySell's brokers report seeing more search funds, private equity and family offices, and its above-$1 million deals sold at 100.8% of asking price on average versus 93.6% below ^[5].

For a sponsor buying in the $5M-$50M band, that points to crowded broker-run auctions. For a searcher in the sub-$1 million band, intermediated deals are less contested but more financing-dependent. Neither dataset measures sales that never reach a broker, so neither can say how much opportunity sits outside intermediated channels or what direct outreach yields. The trade-offs are laid out in intermediated vs proprietary sourcing; the data here describe only the intermediated side.

Mapping brokers in a market (worksheet)

Before relying on brokers for coverage of a sector or region, build a reconciled list of who is active. The aim is one record per firm with sourced fields, not a scraped directory.

Illustrative example (fictional): a buyer targeting commercial HVAC service businesses in a three-state region pulls broker names from listing platforms, association directories and past teasers.

Worksheet fields:

1. Raw name and source URL, with the date seen.
2. Resolved legal entity, from the state business registry.
3. Registration evidence: a FINRA BrokerCheck record if the firm is registered, or a note that none was found. A missing record is not evidence of a violation.
4. Size band evidenced by the firm's own listings or teasers, not by its title.
5. Sector evidence: listings in the target sector within a stated look-back window.
6. Status: keep, merge, exclude or unresolved, with the reason.

Unresolved records stay visible as unresolved. A broker list that silently drops them overstates coverage.

Docket runs this kind of evidence check on target lists before outreach; see evidence standards.

Sources

1. Cornell Law School Legal Information Institute, "15 U.S. Code § 78o: Registration and regulation of brokers and dealers," subsection (b)(13) and statutory notes. https://www.law.cornell.edu/uscode/text/15/78o. Accessed 2026-10-28.
2. Federal Register, "Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change, as Modified by Partial Amendment No. 1, To Amend the FINRA Capital Acquisition Broker ('CAB') Rules" (February 13, 2026). https://www.federalregister.gov/documents/2026/02/13/2026-02899/self-regulatory-organizations-financial-industry-regulatory-authority-inc-order-approving-a-proposed. Accessed 2026-10-28.
3. Federal Register API, search of SEC documents since December 29, 2022 for "merger and acquisition brokers." https://www.federalregister.gov/api/v1/documents.json?conditions%5Bterm%5D=%22merger+and+acquisition+brokers%22&conditions%5Bagencies%5D%5B%5D=securities-and-exchange-commission&conditions%5Bpublication_date%5D%5Bgte%5D=2022-12-29. Accessed 2026-10-28.
4. BizBuySell, "BizBuySell Insight Report: Q3 Business Sales Hold Steady as Market Selectivity Intensifies; Confidence Softens" (Q3 2026). https://www.bizbuysell.com/insight-report/. Accessed 2026-10-28.
5. International Business Brokers Association and M&A Source (Sell Your Way), "The Market Pulse Survey Q2 2026 Reports the Latest Trends in Business Sales up to $50M," PR Newswire (August 25, 2026). https://www.prnewswire.com/news-releases/the-market-pulse-survey-q2-2026-reports-the-latest-trends-in-business-sales-up-to-50m-302858664.html. Accessed 2026-10-28.
6. International Business Brokers Association, "Market Pulse Q2 2026 Highlights" (PDF, August 2026). https://www.ibba.org/wp-content/uploads/2026/08/mp-highlights-q2-2026.pdf. Accessed 2026-10-28.
7. Craig R. Everett, "2026 Private Capital Markets Report," Pepperdine Private Capital Markets Project, Pepperdine Graziadio Business School (May 31, 2026; revised June 22, 2026). https://digitalcommons.pepperdine.edu/gsbm_pcm_pcmr/19. Accessed 2026-10-28.
8. FINRA, "BrokerCheck." https://brokercheck.finra.org/. Accessed 2026-10-28.