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M&A 2025: I Was Wrong, Time for a Do-Over
- In 2025, the expected land rush of quality deals in the M&A market has not materialized, with deal activity remaining sluggish despite earlier optimism.
- Macro-economic challenges are impacting industries like manufacturing and distribution the most, leading to a dominance of professional service firms in the market.
- Valuations have stabilized but show differences between business services and manufacturing, highlighting scarcity driving valuations in high-performing manufacturing firms.
- The gap in valuation between above-average financial performers and non-AAFPs remains significant, with business services seeing a drop in the premium compared to manufacturing.
- Buyers are facing challenges in the current exit environment, leading to a rise in private equity continuation vehicles as a response to dissatisfaction.
- The ongoing uncertainty in macroeconomic factors, the importance of industry niches like defense and medical technology, and the use of earnouts and seller financing are key takeaways for 2025.
- Financial buyers are under pressure to invest, leading to downward pressure on discounts for companies with prospective turn valuations.
- Private equity continuation vehicles are becoming more common, but not a universal solution, with individual/family business owners choosing to wait for the right opportunities.
- Andy Greenberg, the author, is the CEO of Greenberg Variations Capital, an M&A advisory firm, with prior experience in co-founding GF Data, an M&A data tracking service.
- For more information on Greenberg Variations Capital, visit www.greenbergvariations.com.
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