Spring 2025 M&A Update
Middle market M&A activity rebounded in the fourth quarter of 2024, albeit, marginally, over the “summer slowdown” experienced in the third quarter of 2024. The 2024 year as a whole marked improvement related to overall deal activity, as its 379 completed private equity transactions surpassed the 324 and 294 completed transactions seen in 2022 and 2023, respectively. Despite a muted fourth quarter, the middle market continued to show signs of improvement at the end of 2024. Market observers point to the muted fourth quarter metrics as stemming from uncertainty regarding the election in November. The results of the election did not produce a subsequent rush to get deals closed before the end of the year.
Overall transaction volume remained steady quarter over quarter. While deal value fell slightly (5%) quarter over quarter, deal volume in the fourth quarter of 2024 outpaced the prior six quarters, showing signs of resiliency. The U.S. economy grew at an annualized rate of 2.3% in Q4 2024 while inflation pressures persisted. Although the Fed cut rates in September 2024, Federal Reserve officials are expected to remain cautious about cutting interest rates in the near future amidst inflation showing signs of resurgence. The hottest topic in the space, tariffs, has the middle market M&A space facing uncertainty, potentially leading to a “wait-and-see” approach as companies assess the long-term impact of shifting trade policies.
FEATURE ARTICLE
Negotiating Net Working Capital Targets in a Transaction
Also in This Issue
U.S. Deal Value & Volume
EBITDA Multiples
EBITDA Multiples by Buyer Type
U.S. Deal Volume by Industry
Debt Multiples
Number of Deals by Buyer Type