Despite economic uncertainties, geopolitical instability, and fluctuating interest rates, the middle market M&A landscape in 2025 is showing resilience. While the number of deals has softened slightly, dealmakers are focused on quality, technology, and strategic alignment to get deals across the finish line. Here’s how middle-market M&A deals are getting done this year.
Our experience is with the smaller end of the market where buyers tend to be strategic rather than private equity. Transaction volume is down 9% but the deal value is up 15%. This is due to buyers focused on quality companies and EBITDA multiples holding up strong for quality. In the upper end of the middle market, average EBITDA multiples have increased from 8.5X to 10X from last year. Flexibility in deal structures, buyer patience, and seller preparation are driving Q2 2025 expanded activity. Buyers are focused on expanding core capabilities, regional expansion, increasing sector expertise, and value growth.
While private equity is still focused on bolt-ons, and roll ups, they continue to value margin stability, recurring revenue, and sector growth. Healthcare, retail, and AI driven technology companies are getting higher valuations while industrial and manufacturing companies are seeing lower valuations. Hot sectors are AI and automation, healthcare, medical technology, cybersecurity, and business process systems.
If you are a potential seller, preparation for the sale is more critical than ever when buyers search for high quality operators. You need to stabilize earnings, maintain a strong management team, and have a stable, growing customer base. Cleaning up the financial statements and operating processes leads to higher valuations. You must also be flexible on earnout structures to maximize sale value as buyers see this as a risk reduction tool.
There are tools in the market that you can use to evaluate your potential value. Platforms like UniCredit’s DealSync are used to match buyers and sellers plus provide information on deal structures. Also check with industry publications in your industry for articles on recent deals. Examine the target company background via their website, marketing materials, and AI tools to search for information on their product/service quality. This data can help you envision how to package your company for the best image and valuation.
In summary, the US market is healthy in spite of uncertainty, and the nimble thinkers are successful. Deal volume is in a modest rebound, valuations are stable and rising in hot sectors, and deal execution is more thorough. Sellers must be creative in their preparation and better prepared for due diligence.
Our concluding thoughts are that the M&A market is not about volume. It is about value, flexibility, and preparation. For business owners considering a sale or acquirers looking for growth, now is the time to be strategic. Deals are getting done but the rules are changing because valuations are still high for quality.
C Squared Solutions provides interim or fractional CFOs, COOs, and CEO leaders in nearly all industries. We analyze and advise on these issues frequently through sophisticated modeling and experienced management. Give us a call or visit our website for more information and details. We have done many deals and sold our own companies.
