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The 2025 M&A market isn’t quiet, but it is selective. While the number of global private equity and venture deals is down nearly 6% year-over-year, the total value of those deals is up nearly 19%, according to S&P Global. That tells us one thing: fewer deals, higher premiums. Buyers are showing up. But only for the best-prepared companies.
We’re seeing the same story across the lower-middle market. It’s not that businesses aren’t sellable; it’s that the market is pickier than it’s been in years. Buyers are prioritizing clean books, scalable operations, and credible growth narratives. They’re paying up for quality, but passing on anything less than fully baked.
This year, one of the biggest themes in M&A is the gap between what buyers are willing to pay and what sellers expect to receive. It’s not just about ego. It’s about signals. Owners see the inbound interest—calls, emails, unsolicited offers—and they can feel the heat in the market. Many rightly assume their business is valuable. And they’re often correct.
But valuation today isn’t driven by desire alone. It’s driven by diligence. Buyers, especially private equity firms, are more risk-conscious than they were even a year ago. They’re underwriting tighter deals, with heavier scrutiny on earnings quality, leadership depth, and operational resilience. The result? A pricing gap between seller hope and buyer conviction.
Here’s the good news: you don’t have to sell now. If the offers don’t meet your number, you can keep running the business. But that doesn’t mean sitting still.
In our Exit Readiness Report earlier this year, we highlighted that institutional buyers are only advancing on companies that look exit-ready from the outside. In 2025, it pays to operate like you’re for sale, even if you’re not planning to exit this year.
The same work that gets a business ready to sell is the work that makes it stronger to keep. We use a 120-point diligence framework to help owners build what we call "value-first growth."
That means:
Think of it this way: if you wanted to sell your house, you’d do a walk-through with a realtor first. They’d point out the creaky stair, the cracked window, the weird patch of wall. You’d fix it, not just to sell but to increase value. The same goes for your business.
Most owners wait until they’re emotionally ready to sell before they prepare their company. That’s backwards. By then, it’s often too late to move the needle.
So if you're waiting for better market conditions, make that time work for you. Do the work now to close the valuation gap later. When the market turns—and it always does—you’ll be the company buyers can’t ignore.
Want to know where your value gaps are? We’ll walk you through the same diligence framework we use for sell-side clients. No pressure, just clarity.