Suppose you’re a business owner thinking about selling your company or bringing on investors in 2025. In that case, you’ll find a mergers and acquisitions (M&A) market that has shifted significantly in the past few years. The economy has changed, industries have evolved, and buyers are now focusing on new priorities.
Despite some lingering challenges, however, there are reasons for optimism. Industry heavyweights, such as EY-Parthenon, suggest buyer confidence is on the rise, and deal activity is poised to rebound.
Dealmakers are coming to accept that market uncertainty — whether arising from trade wars, geopolitical tensions, volatile regulatory environments, or other causes — is simply the new normal. It can’t be allowed to stifle M&A activity indefinitely. With that thought in mind, this article will describe what lies ahead and how to position your business for a strong sale.
Finding Opportunity in a Changing Market
The mergers and acquisitions market has undergone significant changes since its peak in 2021, when global deal values reached $5.1 trillion. By 2024, that total had fallen to $2.1 trillion. While activity is gradually rebounding, U.S. deal volume in Q1 2025 remained around 14% below last year’s level.
Yet that dip doesn’t capture everything, especially for middle-market companies.
“Despite macroeconomic headwinds, we’re still seeing a resurgence in confidence, especially among buyers with dry powder and long-term investment horizons,” says Dena Jalbert, CEO of Align Business Advisory Services, a top M&A advisory firm.
“Strong sector-specific tailwinds such as infrastructure investment, reshoring efforts, and improved seller readiness are all contributing to a more favorable dealmaking environment in 2025.”
The numbers support her view. Private equity funds now hold around $2.49 trillion in available capital, often referred to as “dry powder.” That means you have a window of opportunity, provided your business is well-positioned and ready.
Investors today move with greater care, weighing sector strength and preparedness for selling your company. If you prepare your business well and time your sale right, your company could be exactly what buyers are seeking.
Hot Industries Drawing Buyer Interest
Not all sectors are pulling equal weight in today’s M&A environment. Investors now target businesses that can weather economic shifts and global uncertainty.
Jalbert highlights a few that lead the pack. “We expect continued strong activity in sectors tied to national resilience and long-term capital spending,” she says. “We believe that aerospace and defense, infrastructure services, advanced manufacturing, and construction engineering are especially well-positioned.”
These industries have several factors working in their favor.
For example, infrastructure firms stand out because they deliver steady returns. High startup costs limit newcomers, so competition remains limited even if the economy wobbles. Meanwhile, manufacturing and metal fabrication are booming thanks to restoring — the process of relocating production back to U.S. soil.
The same tariff pressures that are encouraging reshoring also make services-oriented companies an attractive prospect for M&A dealmakers. Whether they provide IT, asset management, advisory, or professional services, such firms trade in brainpower, not physical goods. As such, their inputs and deliverables aren’t subject to taxation at the border. Coupled with their asset-light business models and growth potential, that fact contributes to these firms’ solid valuations in the current environment.
If your company operates in one of these areas, today’s market could provide a prime opening to attract serious buyers.
Geopolitics Shifting Buyer Priorities and Due Diligence
Global events and political tensions continually reshape what buyers look for, and 2025 is no exception. You’re likely seeing this firsthand: Growing uncertainty has shifted dealmaking toward safer, more predictable markets.
Instead of chasing risky overseas acquisitions, many buyers now focus on companies based in the U.S. or closely allied nations. Tensions, particularly between the U.S. and China, have highlighted the value of keeping supply chains close to home.
“Geopolitical uncertainty is driving renewed interest in domestic supply chains and national defense-related capabilities,” says Jalbert. “We’re seeing increased buyer appetite for businesses that play even small roles in critical industries, especially if they support U.S. infrastructure, defense logistics, or domestic manufacturing.”
In practice, that means owning factories, contracting with suppliers, and ensuring access to critical technologies in the United States (or at least in trusted countries) has never been more appealing.
Due Diligence
Buyers are conducting more thorough due diligence. In addition to scrutinizing your financials, evaluating your target company’s customer base, and determining whether there’s a strategic fit, they’ll be considering the impacts of today’s broader market conditions. As a result, you should be ready to answer questions about the following:
- Where your raw materials and products originate
- Any exposure to tariffs, sanctions, or trade disputes
- The strength of your data security and IT systems
- Links to regions with political or economic instability
Any M&A transaction involving a U.S. company will also need to consider the regulatory landscape. Federal regulators could find that your deal violates antitrust legislation like the Sherman Act or risks noncompliance with employee protections such as the WARN [Worker Adjustment and Retraining Notification] Act. Working with a knowledgeable M&A advisory firm can help you avoid such pitfalls.
Defense, Advanced Manufacturing, or Critical Infrastructure
When selling your company deals in sectors like defense, advanced manufacturing, or critical infrastructure, they will draw special attention. If your business involves sensitive technology or national assets, federal regulators may step in to review the sale for potential security risks. This is especially true if your sale will result in your company being controlled by a foreign person or entity. In these cases, the M&A transaction will be subject to review by the Committee on Foreign Investment in the United States, which will examine such concerns.
If you plan on selling your company in areas like energy, defense, aerospace, or tech, there are ways to get a head start on the tough questions. For instance, you can strengthen your cybersecurity stance, diversify your supply chain, and identify weak spots in your operations. Here, too, an M&A advisor can help you address the relevant issues and position your business on the best possible footing.
Being prepared for the extra level of scrutiny will make your business more attractive to buyers who require assurance before committing.
Private Equity Eyes the Lower Middle Market
In 2025, private equity firms are focusing on the lower middle market, companies generating tens of millions in revenue rather than hundreds or thousands. Even as overall M&A activity has declined, investors continue to pursue these smaller targets.
Why focus on the lower middle market? Jalbert sums it up succinctly: “The LMM offers more attractive pricing, better platform potential, and the chance to buy earlier in the value creation curve.”
For private equity, this means acquiring a solid business, helping it scale, and watching its value increase. There’s less competition, and you can often shape the company’s future more directly. Frequently, these companies are family-owned or still led by their founder. They don’t have the entrenched bureaucracies of larger corporations, and consequently, they are more nimble and capable of responding rapidly to market conditions.
Some investors will establish relationships with lower-middle-market firms before consummating an M&A transaction. In this way, they can gain a more thorough understanding of the business and assist its leaders in achieving their growth goals before executing the sale.
If you’re an owner thinking about selling your company, this trend is very encouraging. If your company falls into the lower middle market sweet spot, you may find a larger pool of buyers — and potential advisors — interested in it now than ever before.
Private Equity Funds
Private equity funds are actively seeking quality businesses of your size. To capitalize on this demand, make sure your house is in order by taking the following steps:
- Organizing clean, transparent financial records
- Clearly demonstrating current and potential revenue streams
- Strengthening your leadership team so buyers see depth beyond you alone
- Documenting systems to ensure operational continuity
- Preparing a clear plan that shows how your company can expand and boost profits
Private equity buyers will still scrutinize every detail, but a well-prepared business can attract interest — and could even spark a bidding contest in the current market.
What This Means for You as an Owner
If you’re thinking about selling your company, you need a clear plan and careful preparation. Even if news about the economy may seem grim, sensibly organized businesses in strong sectors can still see high demand and promising offers. If you’re lucky enough to attract multiple potential buyers, consider the agreement terms as well as the proposed purchase price of each proposal. To ensure your company’s legacy, determine how the buyer plans to carry on the business and maintain its values.
Buyers typically look for companies with reliable cash flow and growth opportunities. They want to see that you’re well-positioned in your market and running efficiently and cost-effectively. Demonstrating that your business can withstand economic fluctuations and that your supply chain remains resilient under stress can add significant value.
As the M&A market continues to shift throughout 2025, owners who enter with a smart approach and solid groundwork stand the best chance of turning today’s uncertain conditions into a successful sale.
Featured Image Credit: Photo by Cytonn Photography; Unsplash; Thanks!
