M&A in 2025: Quality Over Quantity

As we reach the midpoint of 2025, the mergers and acquisitions landscape continues to evolve, defying expectations in some ways. While overall deal volume is down compared to previous years, one aspect of today’s market stands out. Rather than holding steady in a cautious environment, valuations for well-run companies are rising.

At Turning Point, we are seeing firsthand how disciplined operators are commanding premium multiples even in a more selective market. This points to a simple truth that the market has not disappeared, it has just become more discerning.

Global M&A activity has slowed in terms of volume. According to PitchBook data, deals are down approximately 18% year over year, with the U.S. middle market following a similar trend. Rising interest rates, geopolitical instability, and tighter credit conditions have all contributed to a more cautious environment. But despite the slowdown, intent has not faded. Buyers are still active. Whether it is private equity firms quietly building proprietary deal pipelines or strategic acquirers seeking cultural alignment, they are still making moves. They are just more selective. This shift is putting the spotlight on truly well-run companies.

Valuations, despite softening in certain segments, have remained strong for high-performing businesses. In many cases, they have even increased. We have seen clients receive unsolicited offers with EBITDA multiples that rival or exceed pre-pandemic highs. What is driving this? It comes down to risk.

Investors have always prioritized businesses that demonstrate execution strength. Clean financials, experienced leadership, recurring revenue, and operational discipline all help reduce risk in the eyes of buyers. These are the kinds of businesses that feel stable and predictable. And that stability is now commanding a premium.

Private equity firms, in particular, are sitting on record levels of capital and are under pressure to deploy it. But they are being far more discerning than in previous years. The bar has risen. If your company meets the criteria, you may find yourself fielding offers, regardless of your intent to sell.

At Turning Point, we are seeing this play out across our advisory work. Our engagements in 2025 have focused heavily on preparing clients for a more thoughtful and strategic M&A environment. That means strengthening internal capabilities, refining positioning, and thinking several steps ahead. When we work with companies considering a transaction, whether next quarter or two years from now, we focus on three essential areas:

The first is operational readiness. Buyers today are asking more questions and taking a deeper dive during diligence. We help our clients ensure timely and accurate financial reporting, clearly defined business drivers, and solid margin visibility.

The second is narrative clarity. A well-run business needs a well-communicated story. Buyers want to understand what makes the business different. Where is the competitive edge? How has the company responded to recent volatility? Clear and confident answers to those questions can shift the balance during negotiations.

The third is strategic alignment. The best transactions are those where both sides share a vision for post-close value creation. We help clients think carefully about cultural fit, strategic goals, and long-term expectations. Those elements are just as important as the financials.

One company that recently went through this process is a B2B services firm generating $40 million in revenue. They had no plans to sell in 2025, but after receiving several unsolicited inquiries, they asked Turning Point to assess their readiness. What we found was a company with strong cash flow, a steady leadership team, and clean financials. With a few strategic adjustments and a refreshed message, they are now receiving serious interest from both strategic and financial buyers, without ever formally going to market.

Looking ahead, we expect the second half of 2025 to follow a similar pattern. Deal volume will likely remain cautious. Buyers will remain selective. But valuations will continue to be strong for companies that show operational strength and strategic clarity.

For business owners, the question is not whether now is the right time to sell. The question is whether you are ready. Having clean financials, understanding your business drivers, communicating your value clearly, and aligning with the right buyers create new opportunities. It is natural to assume that when deal volume drops, opportunity fades. But that is not the case. In fact, in a quieter market, the best companies shine even brighter.