Citizens 2025 M&A Outlook:

Momentum builds as buyers and sellers get into gear

Download a print-friendly version of this report.

Published January 2025

Key takeaways

Dealmaking hinges on sentiment, and sentiment is measurably higher in the 2025 M&A Outlook compared to recent years. The favorable economic backdrop is a core reason for companies and sponsors to proceed with M&A. Headwinds and uncertainties from the last several years have receded, and valuations are expected to be stable or higher. Some segments show restrained views; smaller midsize firms are more conservative, and many potential sellers lean toward selling a piece of the business rather than a full exit. Still, decision-makers expect 2025 to be a year marked by economic growth and a higher pace of M&A.

2025 kicks off with more momentum

Market sentiment is at a five-year high across midsize businesses in the 14th annual M&A Outlook survey. For 2025, more than half say the market for mergers and acquisitions (M&A) will be strong, based on the views of 400 U.S. midsize company CEOs, CFOs and private equity (PE) principals. With valuations firming and inflation worries fading, economic growth is the most-cited factor driving M&A plans for the year ahead.

M&A Environment Gains Strength. Sentiment climbs to a 5-year high as valuations strengthen and uncertainties recede.

A strong economic outlook is key

Better valuations are boosting confidence

The seller pool has grown

Interest rises in AI, international deals

"The prevailing headwinds of recent years have really moderated. We see companies and sponsors coming into 2025 with big plans, and this year's survey shows how focused they are on the growth environment."

Jason Wallace

Managing Director, Head of M&A Advisory

The growth outlook is strong, led by larger businesses

The economic backdrop is always important to M&A plans, and bullish sentiment is on display in the 2025 M&A Outlook survey. PE firms and larger midsize companies are closely aligned on their economic views, with more than six in 10 saying the economy will improve and about half saying that their economic expectations make them very likely to engage in M&A in 2025. Smaller businesses in the midmarket segment are more measured about their economic expectations and M&A plans.

Strong 2025 Outlook from Private Equity and Larger Corporates. Smaller corporates show M&A caution.

The economy’s influence grows, boosted by U.S. election

59% of midsize businesses believe that the economic growth backdrop in the U.S. will make their business easier to operate in coming year – sentiment that was boosted by the U.S. election. Anticipated interest rate cuts and moderated inflation also top the list of factors making business easier.

When it comes to M&A plans, economic growth and the likely easing of inflation are key factors as well. The U.S. election and anticipated regulatory environment are also supporting M&A plans, according to decision-makers.

Factors Driving 2025 M&A Optimism. Growth expectations, interest rates and other factors cited.

"Sentiment is clearly up going into 2025, and that could mean healthy M&A activity – or it could even mean surging M&A activity. Companies that are planning M&A this year should consider both possibilities and how their strategy would change."

Dave Dunstan

Managing Director, Head of Industrials M&A

Positive valuations, especially from PE

In the 2025 outlook, M&A decision-makers are more upbeat about valuation levels. Compared to recent years, more companies and PE firms expect valuations to rise or remain stable, and importantly, there are fewer who expect valuations to fall.

Private equity and larger midsize firms were the most upbeat. More than half of PE respondents said they see company valuations rising in 2025, echoed by about 49% of larger-midsized company leaders. Smaller businesses were less bullish on valuations, in comparison.

Outlook More Bullish on Valuations. Private equity firms are confident about upside.

"There is a sentiment gap between larger and smaller firms in the middle market, which is a clue that they continue to face differences in their operating environments. Still, we see a high level of M&A interest, especially in selling, among all sizes of midsize corporates."

Tom Donahue

Managing Director, M&A Advisory

Financials, Tech and Industrials top the valuation outlook

Businesses and sponsors in Financial Services and Technology, Media and Telecom (TMT) are the most confident about valuations for their sectors, with about half expecting valuations to rise. M&A decision-makers in the Industrials sector are also quite confident. Transportation and Logistics respondents are at the lowest end of the spectrum, with just 32% expecting higher valuations.

Financials, TMT, and Industrials Display Momentum. Valuation perspectives vary across sectors.

"The macro environment is incredibly important, but you can't overlook the dynamics of specific sectors. The buyer pools are quite different from one sector to the next, and that shapes the choices that sellers face."

Devin Ryan

Managing Director, Director of Financial Technology Research

Seller pool increases, and larger firms are buyers

The pool of potential sellers added 10%, totaling 73% of companies in the 2025 survey, and seller interest is broad-based across different company sizes. The majority of would-be sellers say they are more open to a partial sale or ancillary business-unit sale, rather than a full exit.

Seller Pool Pops, with Broad-Based Enthusiasm. The seller pool grew 10 percent this year, with consistent trends across company sizes.

Private equity firms also anticipate a busier year. 64% of sponsors said they expect deal flow to increase in 2025 – particularly because they expect more PE-backed assets to come to market.

The strategic buyer pool indicates its own interesting trends. After rising 3% in 2024, the share of potential buyers was steady year-over-year. However, there's a gap between larger and smaller firms, with much more buying interest among larger firms in the midsize market.

PE Firms Anticipate Deal Surge in 2025. Nearly half see market-ready PE assets driving growth.

Balanced buyer/seller dynamics drive confidence

Buyers and sellers are perceived to be on fairly equal footing in the current market, another factor that could reinforce confidence in dealmaking. Both private equity and midsize companies view the M&A market as fairly balanced overall.

Across specific sectors, dealmaking conditions vary. In 2025, respondents see a buyer's market dominating in Consumer and Industrials. In contrast, a strong seller's market is perceived in Aerospace, Defense and Government Services.

Buyer Seller Pool Balance Expected for 2025. Sector trends reveal key divergences

"What we are seeing is that the highest quality companies face a seller's market, regardless of sector. There is always a premium on quality, but that effect may be stronger than usual as the market continues to work through the backlog of activity."

Andy Male

Managing Director, M&A Advisory

Interest in AI and international deals is still growing

Among private equity firms, the majority expect deal flow to increase in 2025. Among those who anticipate more deals, one core reason is the ongoing race to add artificial intelligence (AI) companies and capabilities to fund portfolios. The breakthrough technology continues to mature into new use cases, including its expanding role in financial processes within midsize firms and sponsors, as seen in Citizens’ recent AI trends survey.

Another trend that has grown since 2024 is the interest in finding international deal partners. Granted, most midsize U.S. companies are talking about nearby neighbors Canada and Mexico – but many are also open to deals with parties in the UK or Europe.

International M and A interest remains strong. Sentiment shift from 2024 carries through to this year's survey results.

Actions to consider in 2025

If selling, be prepared to go through a thorough marketing process. Though activity is recovering, the buyer pool remains thin in certain areas of the market. A thoughtful and comprehensive approach to marketing can add significant value to the final deal terms.
With balanced market dynamics, deals are still moving at a measured pace. However, if the M&A market surges in 2025, it could shift to a seller’s environment quickly. Buyers may be penalized for moving slowly.
Market dynamics still differ considerably by sector. It’s important to find an advisor who knows your specific space and has the relationships to generate interest and opportunities.

Explanation of methodology

The Citizens 2025 M&A Outlook reflects data from the 14th annual survey of M&A decision-makers in the U.S. midsize market, defined as companies with $25M to $1B in annual revenue. Research was conducted over October and November of 2024, in partnership with independent market research firm Escalent. Researchers surveyed 400 midsize-company CEOs, CFOs, and private equity principals who participate in the midsize market. Respondents were selected to represent a mix of sectors and are not necessarily clients of Citizens.

Get more details on the 2025 M&A Outlook

Download the report

All fields are required unless marked as "Optional".

First Name

Valid First Name required

Last Name

Valid Last Name required

Company Name

Valid Company Name required

Company State

Valid Company State required.

Phone Number

Valid phone required must be 10 digits number 0-9

Email

Valid Email required must have @ included.

Capability of Interest

Valid Capability of Interest required.

Other Interest

Valid other interest required

Company Revenue Size

Valid Annual Revenue required.

How can we help? (Optional)

Thank you!

We have received your inquiry. A Citizens Securities, Inc. (CSI) Advisor will be in touch shortly.

This popup will be autoclosed.