Easing Recession Fears, Robust Private Equity Activity Drives Strong 2025 M&A Market Outlook
BOSTON, Feb. 6, 2025 -- Capstone Partners, a leading middle market investment banking firm, in conjunction with its partner IMAP, a leading global investment banking advisory firm, released its annual Trends in Global M&A Survey Report, with insights from M&A advisors across the world. This report combines Capstone's in-depth investment banking knowledge with proprietary data obtained from 100 participating IMAP M&A advisors across 54 countries. Conducted between September 19, 2024, and November 5, 2024, the survey captures sentiment at a pivotal moment in global middle market M&A, providing insight into M&A market activity throughout 2024 and anticipated dealmaking conditions in 2025.
Key Findings:
- Advisors' economic outlook continued to improve as central banks began to cut interest rates, providing a healthy backdrop for 2025 M&A activity. Only 38% of total investment bankers surveyed expect a recession to be very or somewhat likely in 2025, down 22% year-over-year (YOY) and 40.2% compared to 2023's outlook.
- As M&A activity likely neared or reached its trough in 2024, the vast majority (79%) of total advisors surveyed anticipate 2025 deal flow to increase. This marks a rise of 28% YOY and 50.4% compared to 2023.
- Middle market M&A activity in 2024 continued to remain strong compared to the broader market, with 88% of total investment bankers surveyed indicating that middle market dealmaking outperformed or remained in line with the broader market.
- Advisors' outlook for private equity activity is increasingly bullish for 2025, as more than half (51%) of investment bankers surveyed expect sponsor dealmaking to increase.
- Buyers have become increasingly selective in their acquisition pursuits, prioritizing target companies with robust financial visibility. Among total investment bankers surveyed, 69% indicated that recurring revenue was the most important characteristic to acquirers in 2024, representing an increase of 6% YOY.
- M&A purchase multiples are expected to tick up in 2025, with 46% of advisors surveyed anticipating a moderate rise in valuations compared to 2024. Advisors showcased significant consistency regarding anticipated 2025 industry valuations, with the Financial Technology & Services and Healthcare industries expected to continue drawing the highest average typical M&A EBITDA multiples.
- In 2024, 54% of advisors surveyed identified that business owner retirement was the top factor for sellers initiating an M&A transaction in 2024. For 2025, industry consolidation is anticipated to be the primary sell-side motivator, which is likely a reflection of advisors' expectations for robust M&A volume gains in 2025.
- To achieve a successful M&A deal for a seller, nearly all (97%) advisors pointed to setting a realistic deal valuation as very or somewhat important. This aligns with the primary deal closing hinderance advisors faced throughout 2024, as 60% experienced excessive valuation expectations from sellers.
Through this research, Capstone Partners and IMAP have tracked notable impacts on the global M&A market, current economic environment, as well as M&A advisors' expectations on pricing trends and regional risks and opportunities moving forward into 2025.The report also provides an analysis of sell-side M&A considerations for middle market business owners looking to pursue a liquidity event.
To access the full report including a breakout of the results by industry and region, click here.
ABOUT CAPSTONE PARTNERS
For over 20 years, the firm has been a trusted advisor to leading middle market companies, offering a fully integrated range of investment banking and financial advisory services uniquely tailored to help owners, investors, and creditors through each stage of the company's lifecycle. Capstone's services include M&A advisory, debt and equity placement, corporate restructuring, special situations, valuation and fairness opinions and financial advisory services. Headquartered in Boston, the firm has 175+ professionals in multiple offices across the U.S. With 12 dedicated industry groups, Capstone delivers sector-specific expertise through large, cross-functional teams. Capstone is a subsidiary of Huntington Bancshares Incorporated (NASDAQ:HBAN). For more information, visit www.capstonepartners.com.
ABOUT IMAP
IMAP is an International Mergers and Acquisitions Partnership with a 50-year track record, more than 450 M&A professionals worldwide and a presence in 51 countries. IMAP has closed over 2,200 transactions valued at $130 billion in the last 10 years and is consistently ranked in the world's Top 10 M&A advisors (Refinitiv) for mid-market transactions. For more information, visit www.imap.com.
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