Key Takeaways
- 1M&A activity is rebounding after 2023's slowdown, with strategic buyers leading the charge
- 2Valuation multiples have stabilized but remain below 2021 peaks
- 3Tech and healthcare sectors showing strongest buyer interest
- 4Quality businesses with clean financials are commanding premium multiples
- 5Founders should focus on growth and profitability, not just timing the market
After two years of market volatility and declining deal flow, the M&A market is showing signs of life. But this isn't 2021—buyers are more selective, diligence is more rigorous, and the path to a premium exit has fundamentally changed.
If you're a founder considering an exit in the next 12-24 months, here's what you need to know about the current state of the market and where it's headed.
Market Conditions: The Recovery Is Underway
After hitting a 10-year low in Q2 2023, M&A activity has steadily recovered throughout 2024 and into early 2025. Deal volume is up approximately 25% year-over-year, though we're still tracking below pre-pandemic levels.
What's driving the recovery? Three main factors: interest rate stabilization, pent-up buyer demand, and business owners who've delayed exits finally coming to market.
“We're seeing buyers come back to the table with renewed confidence, but they're being much more disciplined about which deals they pursue. Quality matters more than ever.”
Deal Activity: Strategic Buyers Leading the Charge
Strategic buyers—corporations looking for acquisitions that enhance their core business—are driving the majority of deal activity in 2025. They're taking advantage of private equity firms' continued caution to compete for quality assets.
Strategic Buyers
Corporations looking for synergistic acquisitions
- Aggressive on synergistic targets
- Willing to pay premium multiples
- Moving quickly on good deals
Private Equity
Financial sponsors with capital to deploy
- Still cautious on valuations
- Focusing on add-on acquisitions
- Longer diligence timelines
For founders, this means competitive processes are back. Running a well-orchestrated sale process with multiple strategic bidders can create meaningful competition and drive valuations.
Valuation Multiples: Stabilized but Selective
The days of 10-12x EBITDA multiples for average businesses are over. Today's market is bifurcated: exceptional companies are getting strong valuations, while mediocre businesses struggle to find buyers at any price.
2025 Valuation Benchmarks (EBITDA Multiples)
The spread between top and bottom performers has widened dramatically. Buyers will pay for quality—recurring revenue, low customer concentration, strong management teams—but they're heavily discounting businesses with risks.
Sector-Specific Insights
Not all sectors are created equal in 2025. Here's where we're seeing the strongest buyer appetite:
Technology & SaaS
Strong demand continues, especially for vertical SaaS and B2B platforms with recurring revenue. Multiples: 6-10x ARR for profitable companies, 3-5x for those still burning cash.
Healthcare Services
Healthcare M&A is booming, driven by consolidation trends and demographic tailwinds. Both strategics and PE are active. Multiples: 7-12x EBITDA for high-quality providers.
Business Services
A tale of two markets: specialized services commanding premiums, while commoditized offerings struggle. Multiples: 5-8x EBITDA for defensible, scalable models.
What Founders Should Do Now
Whether you're planning an exit in 2025 or just thinking ahead, here are the moves that will position you for success:
Don't try to time the market perfectly
The best time to sell is when your business is performing well and you're ready. Waiting for 'perfect' conditions often means missing your window.
Focus on what buyers value
Recurring revenue, customer diversification, strong management teams, and clean financials. These fundamentals drive valuations in any market.
Get your financials audit-ready
Buyers are conducting deeper diligence. Invest in accounting systems, document your add-backs, and consider a QoE before going to market.
Build relationships with strategic buyers
The best acquisitions often start with relationships. Identify potential acquirers and start conversations 12-18 months before you're ready to sell.
Work with experienced M&A advisors
In a selective market, how you position your business and run the process matters more than ever. Get professional help.
The Bottom Line
The 2025 M&A market offers real opportunities for founders with quality businesses. Deal activity is recovering, buyers have capital to deploy, and valuations have stabilized at rational levels.
But this isn't a market that rewards mediocrity. Buyers are selective, diligence is thorough, and competition is fierce for the best assets. The companies that will thrive are those that have built strong fundamentals: recurring revenue, diversified customer bases, and sustainable competitive advantages.
If you're thinking about an exit, the time to prepare is now—not when you're ready to go to market. Build value, clean up your financials, and position your business as a must-have acquisition. The buyers are there. The question is: will you be ready when the right one comes calling?
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