Market Update – Q2 2025

This report analyzes M&A activity within the $1M–$10M enterprise value (EV) range, bridging upper Main Street and the lower middle market. Deals under $2M are generally valued on Seller’s Discretionary Earnings (SDE) multiples, while those above $2M begin to shift toward EBITDA-based metrics. The contents of this report were leveraged from IBBA’s latest Market Pulse Report, Dealstats’ latest Value Index, BizBuySell’s Insight Report, Peercomps, GF Data, and Calder Capital’s Proprietary survey data as of June 2025.

Calder Capital Performance

As of May 2025, Calder Capital generated $8.09M in revenue, a 68.9% increase over the same period in 2024. This leap is supported by 28 closed deals, up from 16 in 2024, reinforcing Calder’s upward trajectory in a volatile lower middle market.

Market Activity and Sentiment

Deal Volume Trends:
According to BizBuySell, the market remained resilient with 2,368 businesses sold in Q1 2025, representing a 2% increase from Q4 2024 and holding steady year-over-year. Total transacted value rose 9% to $2 billion, signaling solid market participation across sectors.

Max Friar, Managing Partner of Calder Capital, added, “We had a record Q1, closing 19 deals. This was driven by two factors primarily: sell-side clients who didn’t close in 2024 falling over into 2025, and a record number of buy-side engagements.”

Market Direction:
January saw a 4% increase in closed transactions, driven by optimism surrounding new federal leadership, lower taxes, and anticipated regulatory easing. However, February and March saw a combined 7% decline, attributed to tariff-related uncertainty.

Seller Conditions:
Despite macroeconomic headwinds, IBBA reports that seller confidence showed modest improvement over Q4 2024 and Q1 2025 but still lagged behind the 2021–2022 peak. Advisors continue to cite a “seller’s market” in the $1M–$2M segment, where benchmark-to-sale ratios held firm at 94%.

Max Friar observed two persistent trends and shares: “As of May 2025, two trends from 2024 have continued: 1) persistent uncertainty is causing many sellers to hold back from listing, yet 2) those same owners are still taking calls from buyers who reach out directly. Despite it not being in sellers’ best economic interest to engage with only one buyer, it feels safer than entering the broader market. Many owners are hesitant because their 2024 financials often look worse than 2023.”

Valuation Multiples

Through May 2025, Peercomps reported detailed valuation data:

• $1–2M range (115 transactions)
  • Median SDE multiple: 3.26x
  • Median EBITDA multiple: 4.06x
  • Industry Specific Multiples:
    • Construction: SDE 3.13x, EBITDA 3.95x
    • Manufacturing: SDE 3.15x, EBITDA 3.98x
    • Distribution: SDE 2.76x, EBITDA 3.81x
    • Services: SDE 3.23x, EBITDA 4.26x
    • Wholesale/Distribution/Dealers: SDE 3.45x, EBITDA 4.3x
• $2–5M range (77 transactions)
  • Average SDE multiple: 3.65x
  • Average EBITDA multiple: 4.09x
  • Industry-Specific Multiples:
    • Construction: SDE 3.52x, EBITDA 3.94x
    • Manufacturing: SDE 3.3x, EBITDA 3.77x
    • Distribution/Wholesale/Dealers: SDE 3.63x, EBITDA 4.02x
    • Services: SDE 3.69x, EBITDA 4.23x
• $5–10M range (23 transactions)
  • Median SDE multiple: 4.18x
  • Median EBITDA multiple: 4.6x
  • Median EBITDA margins: 21.39%
  • Observations:
    • Manufacturing was the strongest performer, with median sale prices up 54%, likely driven by onshoring trends and the impact of new steel and aluminum tariffs.
    • Services remain the most active sector, especially in essential areas like healthcare, HVAC, and plumbing.
    • Retail and restaurants struggled with 4–11% drops in median sale prices.
    • ~80% of deals >$5M attracted 3+ offers; 16% saw 10+ bids

Median EBITDA margins in this segment were 21.39% and M&A advisors reported that ~80% of deals >$5M attracted 3+ offers; 16% saw 10+ bids.

Sentiment & TrendsEmpty heading

According to the IBBA’s latest Market Pulse Report, sellers in this segment showed improving confidence, though still below 2021–2022 peaks. Dealmakers attribute the stability to enthusiasm following the 2024 election and a small interest rate drop, though tempered by tariff and inflation concerns.

The $5-10M segment in particular sits at a strategic pivot point: strong enough to attract financial buyers but still vulnerable to macro pressures. Sellers in the $2M–$5M and $5M–$10M buckets are increasingly pursued by PE firms executing add-ons and strategic buyers seeking tuck-ins.

Friar commented, “It is too early to tell how tariffs will impact the lower middle market. Suffice to say that we have seen consistent demand for home services, construction services (plumbing, HVAC, fencing), infrastructure, and food businesses (manufacturers, distributors). These are obviously ‘safer’ plays in the face of a potential recession and rapidly moving AI development. While we do not handle a lot of restaurants or retail, that market seems all but dead right now.”

Deal Structure and Financing

Equity vs. Debt Composition:

• IBBA reports that seller financing averaged 15% of deals in the $1–5M range
• IBBA states that seller financing averaged 11–13% of deals in the $5–10M range
• SBA 7(a) loans remain critical, although recent federal budget cuts and SBA restructuring may introduce challenges in the coming quarters

Leverage Metrics:
Traditional SBA financing still underpins many deals in this EV range. However, recent changes in the SBA 7(a) program, including workforce cuts and restored lender fees, are disrupting deal flow if implemented aggressively.

Interest Rate & Lending Commentary:
High interest rates continued to shape deal terms. IBBA reports that some lenders offered rates as low as 7.5%, but underwriting standards remain tight. Seller financing is becoming increasingly essential, with 62% of brokers calling it “very important” in today’s market.

“Seller financing is uncertainty’s friend, and we live in uncertain times,” said Friar. He continued, “Interest rates are still elevated, but the shock has worn off.”

Buyer Dynamics

IBBA provides us with the following buyer profiles by deal size:

$1–2M segment:

• 50% of buyers were first-time business buyers
• 43% were buying a job
• 32% pursued horizontal add-ons
• Nearly half were located within 20 miles of the seller

$2–5M segment:

• Likely a strategic company (23%) or a serial entrepreneur (23%)
• Likely seeking a horizontal add-on (33%)
• A plurality are located within 20 miles of the target (44%)

$5–10M segment:
Broadly, from $5M-$10M (even to $50M), the buyer profile expands:

• 59% of buyers were private equity
• 64% were looking for horizontal add-ons
• 55% were located more than 100 miles from the seller’s location

Private Equity:
Based on IBBA’s report, PE activity was light in the $1–5M range but stronger from $5M–$50M. Smaller add-ons remain a popular strategy.

Family Offices & HNW Individuals:
Buy-side interest has surged in 2025. Max Friar reported that Calder’s buy-side engagements outpaced sell-side 24 to 12 in Q1, a ratio that has continued into Q2. He continued, “Buyers are frustrated with a low level of listed sellers and are looking for off-market ways to increase deal flow and the chance of successful closings.”

Strategic Buyers
Based on IBBA’s report, within the $1M–$2M segment 17% of buyers were strategic companies, while 43% were motivated to “buy a job,” reinforcing the role of business ownership as a vehicle for financial independence.

Many transactions in the $5–10M range are also driven by strategic acquirers.

Economic Context

Trade Policies & Tariffs:
Trump’s early 2025 tariff announcements created uncertainty. According to BizBuySell:

• 37% of business owners experienced rising costs
• 26% reported reduced profitability

As a result of the tariff adjustments made in April and May, Calder’s Max Friar states: “We’re seeing some clear themes take shape. One, we have found that an increasing number of the lower-middle market manufacturers that we have interacted with, from around the U.S., are in distress or are struggling right now. Also, there’s been a notable uptick in reshoring-related conversations. Tariffs are part of the equation, but the broader driver is the uncertainty of what is next. We have found that many manufacturers are treading water, delaying capital expenditures, and trying to navigate shifting geopolitical and supply chain dynamics.

Interest Rate Outlook:
While the Fed held rates steady through Q1, buyer optimism reflected hopes of a mid-year cut, however, it appears that the Fed is in a “wait and see” mode. Lenders remain cautious, and SBA-backed lending is under scrutiny, adding complexity to Main Street deals.

Inflationary Pressures:
Increased material costs and wages continued to affect seller margins and pricing power. Still, recession-resistant sectors: home services, medical, and logistics remained strong acquisition targets.

Consumer Demand Signals:
Discretionary spending showed signs of contraction. Restaurants and retail stores experienced declines in median sale prices, while essential service businesses remained in high demand. Friar notes, “Fears of recession, changes in the labor market, and inflation have squeezed already very tight margins, forcing many sellers out of business and buyers on the sidelines.”

Exit PlanningEmpty heading

Seller Preparation Tips:
A key finding from the Market Pulse Report is that 90% of sellers were first-timers, and fewer than 5% had a written exit strategy. Calder strongly recommends working with professionals early to avoid leaving money on the table.

Calder’s Advisory Services:
With decades of experience and a reputation for candid advisory, Calder Capital’s Exit Planning Advisory helps sellers enhance value through rigorous preparation, detailed valuation, and targeted buyer outreach, often yielding multiple competitive offers.

Looking Ahead

Forecast Summary:
While the first quarter showed resilient fundamentals, Q2 has brought more volatility as tariffs begin to ripple through supply chains and buyer confidence adjusts. Deals are taking longer, and diligence periods are expanding.

In Q2 2025, market fundamentals remain steady, but uncertainty around tariffs, SBA policy changes, and rate movements could increase deal friction and time to close. Tariff uncertainty is foreseeably going to continue into Q3 2025.

IBBA states that deals between $1-5M are seeing an average closing time of 8–10 months, with 3 months from LOI to close. They also report due diligence averages 5.5 months in the $5–10M segment, a record high.

General Sentiment:
As Max Friar puts it: “Despite hesitation from many sellers, buyers are eager and aggressive. The real winners will be the sellers who prepare, position strategically, and are willing to engage the market.”

Sentiment remains cautiously optimistic. Many small business owners perceive 2025 as a good year to sell, especially before potential tax or economic headwinds worsen. Buyer activity is stable, though price expectations may diverge from valuations in uncertain sectors (manufacturing, construction).

This analysis integrates data from Q1 2025 data from IBBA’s latest Market Pulse Report, Dealstats’ latest Value Index, BizBuySell’s Insight Report, Peercomps, GF Data, and internal insights from Calder Capital’s Sell-Side and Buy-Side teams as of June 2025.

This report analyzes market conditions for U.S. businesses transacting at enterprise values between $10 million and $25 million. Insights are drawn from Q1 2025 data compiled by Axial, GF Data, IBBA’s latest Market Pulse Report, PitchBook, and Calder Capital’s Proprietary survey data as of June 2025.

Calder Capital Performance

Through May 2025, Calder Capital generated $8.09M in revenue, a 68.9% increase over the $4.79M earned in the same period of 2024. This growth has been off the back of 28 closed deals vs 16 during the same period in 2024. This substantial year-over-year growth reflects Calder’s increasing dominance in the lower middle market and ability to buck trends despite significant macro uncertainty.

Market Activity and Sentiment

Deal Volume Trends:
According to GF Data, deal volume in Q1 2025 declined nearly 40% from the prior quarter, with only 59 reported deals, compared to 98 in Q4 2024. By contrast, PitchBook reported 87 deals in Q1, representing a slight decrease from GF Data‘s 94 in Q4 2024.

Market Direction:
While macro volatility (e.g., tariff threats and interest rate concerns) loomed large, buyer interest remained strong. IBBA’s latest Market Pulse Report noted that seller confidence rebounded modestly, though still below 2021–2022 highs. IBBA states that advisors report steady offer counts per deal, with businesses over $5M drawing 3+ offers in 80% of cases.

For further perspective, watch Garrett Monroe, Calder Capital Sell-Side Director, discuss the top 5 things impacting M&A right now. Monroe highlights:

1. Interest rates: Rate volatility continues to affect financing and valuations.
2. Tariffs: New trade policies are increasing costs and delaying cross-border transactions.
3. The right buyers: Finding strategic or synergistic acquirers is more crucial than ever.
4. Quality of earnings: Verified earnings and strong QofE reports drive better offers and smoother closings.
5. Talent retention: Labor shortages and leadership continuity significantly impact value.

These macro and operational issues are driving deal dynamics in real time, prompting many owners to begin valuation and succession planning now.

Seller Conditions:
Per IBBA, Seller market sentiment ticked upward in Q1, with roughly 60% of advisors citing favorable conditions (such as stable multiples, continued buyer competition, and continued PE investment) in the $10M–$25M range, up slightly from the prior year.

Valuation Multiples

Industry-Specific Multiples:
GF Data’s latest M&A Report provides us with the following multiple breakdowns: 

• Manufacturing: 6.1x EBITDA (level from 6.1x in 2024)
• Business Services: 7.8x EBITDA (up from 6.3x in 2024)
• Distribution: 7.6x EBITDA (up from 6.6x in 2024)
• Healthcare: 5.8x EBITDA (down from 7.0x in 2024)

Premium for Above-Average Financial Performance:
High-performing companies which experience a buyout averaged 6.5x EBITDA in Q1 2025, per GF Data’s M&A Report, which continues the trend of companies with above average financial characteristics increasing in value, from averaging 5.9x between 2003 and 2020. This reflects increased buyer confidence in average performers.

Deal Structure and Financing

Equity vs. Debt Composition:
In Q1 2025, GF Data’s Leverage Report shares the following trends occured in the $10-25M segment:

• Equity Contribution: 36.2% (down from 41.7% in 2024)
• Senior Debt: 54.4% (up from 50.6%)
• Subordinated Debt: 9.5% (up from 7.7%)

Leverage Metrics:
For $10–25M platform deals, GF Data witnessed the following averages:

• Total Debt/EBITDA: 3.2x (up from 3.1x in Q4)
• Senior Debt/EBITDA: 2.0x (up from 1.6x in Q4)

Debt usage increased overall, according to GF Data, particularly in business services. Manufacturing saw a sharp drop in senior leverage (1.7x, down from 2.2x), while business services rose to 3.2x.

A key development is the growing prevalence of seller financing and earnouts as components of deal structures. According to both internal observations and Axial‘s “What Makes a Winning LOI” database, 60% of winning LOIs included seller financing, a marked shift in risk-sharing toward sellers. Calder’s Garrett Monroe also noted that seller financing is becoming “more common and more expected,” especially as lenders tighten underwriting standards.

Additionally, deal demand continues to significantly outpace supply. Calder and other intermediaries are observing 2 to 3 times more buyers than sellers in the $10–25M range. This supply-demand imbalance, especially for high-quality targets not directly impacted by international trade dynamics, is helping sellers retain negotiation leverage, even amidst uncertain macro conditions.

For reference, Axial‘s data also highlights that deals in automation and business services have seen stronger competition and structure flexibility in early 2025, including wider use of creative deal terms and flexible timelines.

Interest Rate & Lending Commentary:
Senior debt pricing declined from 8.6% in Q4 to 7.9% in Q1, as sub-debt coupons remained high.

Buyer Dynamics

Broadly, from $5M-50M segment, IBBA has found the buyer profile expands:

• Most buyers are Private equity (59%)
• A vast majority are looking for horizontal add-ons (64%)
• A majority are located more than 100 miles (55%) from the seller’s location

Private Equity:
Despite a 40% drop in dealmaking from Q4 2024 to Q1 2025, PE firms remain highly active and focused on acquisitions in the $10–25 million transaction range, particularly as add-on acquisitions within larger platform strategies. According to IBBA’s latest Market Pulse Report Executive Summary, private equity buyers accounted for 59% of all transactions in the $5M–$50M space. These acquisitions were overwhelmingly horizontal add-ons (64%), designed to create synergy and scale. Buyers were also geographically removed, with 55% located more than 100 miles from the seller.

Importantly, PE’s dominance is part of a sustained trend: over the last eight quarters, private equity has captured an average of 42% of deals in this range, while strategic buyers made up 37%, reinforcing the sector’s long-term attractiveness to institutional capital.

However, as noted by Garrett Monroe, Sell-Side Director at Calder Capital, despite ample dry powder, PE and family offices are facing tighter lending conditions, with many of their partner lenders currently pulling back. As Garrett explains, “they’re swimming downstream,” focusing on smaller, more achievable deals that don’t rely on aggressive leverage.

According to Monroe, strategics are increasingly pursuing off-market deals and are increasingly scrutinizing marketing, equipment, and insurance costs in their acquisition targets. Consequently, outsourced marketing and PR firms are beginning to feel financial pressure, while sectors like HVAC, plumbing, landscaping, facility maintenance, and other blue-collar, asset-light B2B services are expected to remain robust through year-end.

Monroe also highlights that search funds are thriving in the $5M–$20M range. In terms of trends, sellers are more often turning inward rather than hiring third-party consultants, investing instead in key human capital hires like CFOs or HR managers. These decisions reflect a growing desire to resolve leadership pain points prior to going to market.

Finally, Monroe cautions against relying too heavily on projection-based metrics, especially in commodity-sensitive industries, due to continued volatility. In this environment, he emphasizes that “verified TTM performance and operational simplicity” are the clearest paths to deal success.

These insights reflect proprietary intelligence from Calder Capital’s active market participation and direct engagement with both buyers and sellers.

Family Offices & High-Net-Worth Buyers:
Although less dominant than PE, IBBA says these buyers continue to compete in niche verticals. Often categorized as first-time or serial entrepreneurs, they are increasingly active in sub-$25M transactions, leveraging creative financing or seller relationships to gain access.

Strategic Buyers:
Strategics represented 23% of $5M–$50M buyers in Q1 2025 (IBBA). Their primary motives were horizontal expansion (33%) and improved return on investment (14%), consistent with past periods. As cross-border and tariff discussions unfold, strategics are prioritizing geographic and operational diversification, especially in construction, engineering, and distribution industries.

Economic Context

Trade Policies & Tariffs:
Per Pitchbook, IBBA, and Calder Capital, new tariffs proposed by the Trump administration stirred uncertainty with buyers and sellers. Sectors like manufacturing and distribution, with global inputs, face margin compression and slowed decision-making. As we move through Q2 and into Q3, we are starting to see early data and deal reactions that provide clarity on how these policies are playing out.

According to Monroe, we are approaching an inflection point where the impacts of significant policy change are becoming tangible. While a business valuation may seem straightforward, broader household dynamics such as student loan burdens and political instability are creating hesitation among some sellers. Monroe notes that “when financial pressures mount at home, it affects business decisions too.” The result is a noticeable reluctance among some owners to move forward, especially in uncertain environments.

Interest Rate Outlook:
With the Fed holding steady and the Bank of Canada already cutting rates, buyers are watching closely. A rate cut could release pent-up capital deployment in Q2 2025.

Inflationary Pressures:
Labor and input costs remain elevated, though price stabilization is occurring according to GF Data and Pitchbook. Multiples have normalized compared to 2021, signaling a post-pandemic valuation reset.

Consumer Demand Signals:
Despite macro headlines, business-to-consumer transaction volume rose, led by strong showings in retail and consumer health. However, tariff fears may impact Q3 deal velocity.

Lender Sentiment:
According to Monroe, many lenders are still pulling back or becoming significantly more selective, particularly when underwriting larger or less proven assets. This constraint is pushing PE firms and family offices to “swim downstream,” focusing on smaller, simpler deals or engaging in all-cash offers where possible.

Lender sentiment in Q2 2025 remains cautious, particularly among institutions backing private equity and family offices. However, we have found that lender behavior is not meaningfully different from Q1 2025. As previously noted, bank lending remains selective, favoring companies with strong recurring revenue, diversified customer bases, and proven management teams. At the same time, more flexible financing terms are being required to get deals done.

As Monroe explains, traditional bank financing is proving difficult to secure, so seller financing, earnouts, and SBA-backed loans are filling the gap. This has created a bifurcated market: credit-constrained sponsors are retooling expectations, while buyers with capital, especially strategics, are moving quickly to lock in value. These trends reinforce the need for sellers to understand the current lending landscape and to plan accordingly when structuring a deal.

Exit Planning

Seller Preparation Tips:
Data from IBBA’s latest Market Pulse Report reveals that 90% of lower middle-market sellers are first-timers, and 80% lack a written exit plan. Advisors urge early engagement, clean financials, and documented SOPs to mitigate buyer risk.

As Sell-Side Director Garrett Monroe at Calder Capital advises, “go slow to go fast,” emphasizing that the more work a seller does pre-launch, the greater the certainty to close. While the industry average time to close is 90–120 days, he notes that timelines are increasingly closer to 150 days, particularly when diligence readiness is lacking. Additionally, Monroe recommends sellers remain flexible on pricing: “Be willing to take a 10–20% discount if the buyers have capital,” given the competitive environment and rising value of certainty in closing.

Calder’s Advisory Services:
Calder Capital continues to guide sellers through strategic audits, valuation maximization, and buyer matching across construction, services, manufacturing, and distribution sectors. While these four industries are our core areas of expertise, Calder remains industry agnostic and serves clients across all market segments.

Additionally, Monroe, Sell-Side Director at Calder Capital, notes that projections are increasingly difficult to use for valuation purposes in the current environment. “The further we go into the year, the more distressed situations we are going to continue to see,” he warns. This includes more corporate divestitures, with companies shedding loss-leading units and conducting carve-outs to reallocate resources and improve divisional performance.

Looking Ahead

Forecast Summary:
While the economy is reacting slowly to the effects of record levels of policy change, Q3 or Q4 will likely reveal the longer-term implications. For sellers, now is an excellent time to obtain a valuation, not necessarily to go to market, but to prepare as the dust settles. Monroe emphasizes that several trends are already taking shape: more corporate divestitures, an uptick in internal management transfers, and rising demand for mediator-led family business transitions as household dynamics become more sensitive.

Additionally, Monroe notes that there has been a rise in off-market deals, where sellers prefer to engage in a few targeted conversations rather than a full process, though this can result in lower valuations due to limited buyer competition.

• Valuations are expected to remain stable
• Leverage may increase modestly in Q2 if rate cuts materialize
• Buyers remain aggressive for well-prepared businesses, especially in fragmented industries ripe for roll-ups

Market Risks and Opportunities:
We are beginning to see early impacts of policy changes and tariffs materializing in Q2 data and deal reactions. The volume of changes (political, regulatory, and economic) is unprecedented and affects not only businesses but also households. As a result, financial pressures such as student loan repayments and general instability in household finances are influencing business owners’ willingness to enter the market.

Sellers are increasingly navigating a landscape shaped by household financial strain, shifting government policies, and evolving buyer expectations, all of which influence timing and strategy.

This analysis integrates data from Q1 2025 data from Axial, GF Data, IBBA’s latest Market Pulse Report, PitchBook, and internal insights from Calder Capital’s Sell-Side and Buy-Side teams as of June 2025.

This report analyzes M&A activity in the U.S. market for companies with enterprise values between $25 million and $100 million. It draws on Q1 2025 data from GF Data, IBBA, PitchBook, and internal insights from Calder Capital’s Sell-Side and Buy-Side teams. These companies are typically mature, professionally managed, and attractive to both institutional buyers and strategic acquirers.

Calder Capital Performance

Through May 2025, Calder Capital generated $8.09M in revenue, a 68.9% increase over the $4.79M earned in the same period of 2024. This growth has been off the back of 28 closed deals vs 16 during the same period in 2024. This substantial year-over-year growth reflects Calder’s increasing dominance in the lower middle market and ability to buck trends despite significant macro uncertainty.

Market Activity and Sentiment 

Deal Volume Trends:
Transaction volume fell sharply in Q1, with GF Data reporting only 59 completed deals across its contributor network, down nearly 40% from 98 in Q4 2024, per GF Data.

GF Data and Calder Capital data show that in the $25–100M range, buyers generally became more selective. Due to market uncertainty, some sellers postponed launching to market. Sam Scharich, Buy-Side Director, observed, “In April, we sourced 115 new leads, which led to 57 buyer and seller calls or meetings, and 10 IOIs or LOIs. That was quite a drop from prior months, and I’d attribute a lot of that to the turbulence due to tariff noise.”

Pitchbook reports that Global M&A activity overall reached $1.05 trillion in deal value across 12,371 transactions in Q1 2025, a decline from 3.7 trillion in value in Q4, with 46,230 deals being executed. North America led with 80% of Pitchbook’s top ten leaderboard. However, growing caution in late Q1 suggests that Q1 could mark the high point of the year if uncertainties persist, or it could mark the low point of the year if investors are given certainty in the market.

Market Direction:
As Max Friar, Calder Capital Managing Partner, observed, “Post-election, we felt that a lot of sellers would be coming to the market. However, given the deep, recent uncertainty around tariffs, stock market volatility, and other policy measures coming from Washington, some sellers are postponing launch. For those sellers who have been planning an exit for a long time, they are continuing to pursue their exit.”

Buyers, meanwhile, are sharpening their focus. Scharich states, “Despite the slowdown in the total number of leads, the quality of these leads remained very high. We are finding great quality businesses that our buyers are interested in, and many buyers spent a lot of time pursuing existing leads.”

Pitchbook reports that Q1 also saw a number of midsize IT infrastructure and software deals in the $25M–100M range, including carveouts and tuck-ins by strategic buyers.

Seller Conditions:
Scharich has found that despite economic pressure, buyer demand for quality assets remains strong. Sellers with verified TTM performance and margin stability are still commanding premium valuations. 

As Friar notes: “If you are a seller that has clean financials, strong profits, a diverse customer base, and are resilient against AI or tariffs, it remains a fantastic time to sell and a strong sellers’ market. However, if you are struggling, shrinking, and have weak financial performance, the market will not be kind.”

Valuation Multiples

Calder Capital has found that valuation expectations have remained relatively steady across middle-market segments from Q4 2024 through recent tariff turmoil, and into Q2 2025. 

According to PitchBook, the broader North American middle market median EV/EBITDA was held at 9.6x, for the TTM ending Q1 2025. However, this figure spans a wide range of enterprise values and does not necessarily reflect conditions specific to the $25M–100M TEV segment. 

In this report’s target range, $25-100M, actual multiples, particularly in sectors like manufacturing, distribution, and niche business services, tend to trend lower than the broader median. Nonetheless, the relative stability of the North American middle market provides a benchmark that affirms pricing resilience compared to post-pandemic fluctuations. For companies in the $25M–100M range, sectors such as IT, business services, and healthcare have continued to trade at healthy valuations, particularly when backed by recurring revenue or proprietary technologies.

GF Data based their Q1 valuation data on 59 transactions which were between $10-500M TEV. Of that sample, GF Data reports businesses in the $25M-50M range are being exited around the following, average EBITDA multiples:

• Manufacturing: 5.3x
• Business Services: 7.8x
• Distribution: 7.4x
• Healthcare: 10.2x

GF Data based their Q1 valuation data on 59 transactions which were between $10-500M TEV. We believe that due to the decreased deal volume in this segment, within the last quarter, GF Data was unable to provide a multiple for distribution businesses. We believe this decrease in deal flow also resulted in the greater than normal variations in manufacturing and healthcare multiples. GF Data reports Businesses in the $50M-100M range are being exited around the following, average EBITDA multiples:

• Manufacturing: 8.6x
• Business Services: 8.2x
• Healthcare: 8.5x

Premium for Above-Average Financial Performance:

Per GF Data’s M&A Report, businesses with AAFP status averaged 7.5x EBITDA (in the $25M-50M segment) and 8.8x EBITDA (in the $50M-100M segment). The average multiple for businesses in all industries in the $25M-$50M segment is 7.4x and the average multiple for businesses in aggregate, within the $50-$100M segment is also 8.8x.

Deal Structure and Financing

Equity vs. Debt Composition:
Platform deals saw more conservative structures, while add-ons benefited from existing credit capacity. Monroe notes that seller financing is “more common and more expected” as lenders tighten.

For Q1 2025, GF Data found that deals were comprised of the following funding sources in the $25M-$50M segment:

• Equity Contribution: 37.9%
• Senior Debt: 54.2%
• Subordinated Debt: 7.8%

The breakdown in the $50M-$100M segment is as follows:

• Equity Contribution: 68.7%
• Senior Debt: 27.7%
• Subordinated Debt: 3.6%

Leverage Metrics:
“Traditional bank financing is proving difficult to secure,” says Garrett Monroe, Sell-Side Director. “So seller financing, earnouts, and SBA-backed loans are increasingly bridging the gap.”

GF Data reports the following metrics for the following ranges:

• Total Debt/EBITDA: 3.2x for $25–50M; 2.8x for $50–100M
• Senior Debt/EBITDA: 2.2x and 2.6x, respectively

Interest Rate & Lending Commentary:
Senior debt pricing fell to 8.0% in Q1, while sub-debt averaged 11.4%, marking increased lender competition despite cautious underwriting (GF Data). Monroe emphasized the new financing norm: “PE firms are swimming downstream, chasing simpler deals. Sellers need to be flexible if they want to close on time.”

Buyer Dynamics

Broadly, from $5M-50M segment, the buyer profile expands (IBBA):

• Most buyers are Private equity (59%)
• A vast majority are looking for horizontal add-ons (64%)
• A majority are located more than 100 miles (55%) from the seller’s location

Private Equity:
PE buyers dominated platform activity but often opted for add-ons in the $25–75M space. Monroe notes, “Dry powder is plentiful, but credit constraints are real. Clean, recession-resilient assets are winning the day.”

Family Offices & High-Net-Worth Buyers:
Scharich has found that these buyers are ramping up proprietary outreach and often win deals by offering simplicity and speed. 

Strategic Buyers:
According to PitchBook’s Q1 2025 data, strategic buyers remained active in sectors such as business services and healthcare. The report also highlights continued interest in carve-outs and divisional divestitures, particularly among corporate sellers optimizing their portfolios.

Economic Context

Trade Policies & Tariffs:
The Q1 reintroduction of tariffs by the Trump administration prompted strategic supply chain reviews. As Max Friar noted, “Pricing power is fragile right now. If your business relies on international components or contractors, buyers will press you on it.” 

Friar adds: “We’re seeing a notable uptick in reshoring conversations. Many manufacturers are treading water, delaying capital expenditures, and trying to navigate shifting geopolitical and supply chain dynamics.”

Monroe confirms that diligence now includes tariff modeling, especially in manufacturing and distribution. 

Interest Rate Outlook:
Though the Fed paused rate hikes and the shock no longer lingers, elements of volatility remain. Garrett Monroe added, “Don’t time the market. If you have strong earnings, a rockstar team, and a solid business structure, the best time to sell is when you’re ready.” Calder has found that the current Fed policy and credit spread supports sellers.

Inflationary Pressures:
Monroe reports that while input and labor costs remain elevated, he has seen some stability return. Buyers now focus on margin consistency and lean operations over growth projections.

Consumer Demand Signals:
PitchBook’s sector momentum index ranks IT and financial services as leading sectors in Q1 within North America. Healthcare showed signs of a rebound in deal activity but lower valuation momentum, while materials and B2C lagged amid weaker sentiment.

Despite economic headwinds, Calder Capital has found a trend that buyers are favoring consumer-facing businesses that offer recurring-revenue models. Transactions in food and beverage, pharmacy chains, as well as automation, and business services continue to attract attention.

Exit Planning

Seller Preparation Tips:
To expect a premium valuation and offer, sellers must fortify financial systems, demonstrate recurring revenue, and empower secondary leadership. Calder’s team emphasizes “audit-ready” financials and sell-side QofE reviews to preempt diligence gaps.

According to Monroe: “Go slow to go fast. Do the pre-market work: QofE, management depth, and margin analysis, and you’ll dramatically improve close rates while reducing surprises.”  He also warns sellers to “be willing to take a 10–20% cut if the buyer has capital. Buyers offering cash offer certainty, which is meaningful in this market.”

Calder’s Advisory Services:
Calder Capital continues to guide business owners through strategic, well-timed exits. Our emphasis on readiness, buyer fit, and optionality enables clients to outperform market norms. 

As Friar reinforces, “Despite hesitation from many sellers, buyers are eager and aggressive. The real winners will be the sellers who prepare, position strategically, and are willing to engage the market.”

Scharich states: “With limited deal flow, buyers have to go after off-market deal flow. They cannot wait for listed deals to pop up that fit your criteria—they have to run a proprietary search. They have to be persistent and have to be personal. A lot of these owners are getting reached out to every single day. Sellers remember buyers who take a respectful, differentiated approach.”

Looking Ahead

Forecast Summary:
Q2 has tested the market’s resiliency and we foresee that Q3 2025 will, also. We expect strong sector bifurcation, with tech, healthcare, and services poised to lead, while manufacturing and retail may lag amid tariff and inflation exposure.

Expect Q3 to bring more deal activity if rate cuts materialize. Sellers sitting on the sidelines in Q1 may enter the market. However, Monroe cautions: “In Q2, profitable companies with strong supply chains and diverse customer bases are finding multiple offers. Everyone else needs to be prepared to accept revised terms, or create and time an exit plan.”

Market Risks and Opportunities:
If your business is profitable and resilient, this is still your market. The runway to 2026 may be bumpy, but with proper preparation, sellers in the $25–100M range can achieve excellent outcomes.

This analysis integrates data from Q1 2025 data from GF Data, PitchBook, and internal insights from Calder Capital’s Sell-Side and Buy-Side teams as of June 2025.