The Fed just hiked. Here is where disciplined buyers move.

FROM THE DESK OF FADI MALOUF | SEPTEMBER 2026

Everyone was waiting for the labor market to crack. It did not.

The August jobs report landed on September 4. Payrolls rose 162,000. Unemployment held at 4.1%. June and July were both revised up, and July flipped from a loss to a gain. Wages are up 3.1% over the year.

Twelve days later the Fed raised the federal funds rate a quarter point to a range of 3.75% to 4.00%. Unanimous vote. Their words: inflation remains elevated.

So the story a lot of people were telling this summer, soft jobs, cuts coming, cheaper debt by year end, is dead for now.

The next jobs report comes October 2. It will not change the math below.

Sources: BLS Employment Situation, August 2026 and the FOMC statement, September 16, 2026.

If the economy is holding and rates just went up, then the cost of waiting went up with them.

Debt got more expensive. SBA 7(a) loans price off prime. Going into the meeting prime sat at 6.75%, with variable rates on larger loans starting around 9.75%, per Lendio's September rate update. A quarter point hike flows straight through to that number.

Here is what the dealmakers are saying. In ACG's Q3 2026 sentiment survey, 63% still expect M&A activity to pick up in the back half of the year. 49% call the financing environment favorable. Mismatched price expectations between buyers and sellers ranked as the second biggest risk to getting deals done.

One respondent put it plainly. Multiples for A grade targets are extremely high. Lower grade companies are not getting bids.

That is the whole market in two sentences.

The clean businesses are getting bid up by buyers who need to deploy. Everything else is sitting. That middle, solid companies with one or two blemishes, is where disciplined buyers make their money in a market like this.

I have been buying companies since 1999. The best deals I ever did were not the prettiest businesses. They were the ones nobody else wanted to underwrite.

If you are a buyer, stop chasing the auction. Go where the bids are thin and bring structure, not just price.

If you are an owner, understand that higher rates shrink what a buyer can borrow against your cash flow. If the price is not moving, then the terms have to. Seller paper, earnouts, a longer close.

29%. That is the share of lower middle market deals under $50M that now carry an earnout, per SRS Acquiom's 2026 deal terms report. For deals under $25M it is 35%.

One in three deals is bridging the price gap with future performance. That is not a trend. That is the new default...

Pick one business you have been watching that is not an A grade asset. Build the offer you would sign at today's cost of debt. Then write down what portion of that price you would push into a seller note or an earnout to make it work.

Send it. Before the October 2 jobs report gives everyone another excuse to wait.

Forward motion,

Fadi

This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities, financial instruments, or investment products. FM Enterprises and Fadi Malouf do not provide legal, tax, investment, or financial advice. Any business, acquisition, or capital related discussion is subject to further review, appropriate due diligence, and applicable professional guidance.