Q3 2025 | Market Update:
Business Transactions in the $1–10 Million Range

Introduction

This report examines M&A activity in the U.S. market for companies with enterprise values between $1 million and $10 million. It leverages Q2 2025 data from PeerComps, IBBA, PitchBook, and internal insights from Calder Capital’s Sell-Side and Buy-Side teams. Companies in this range are typically mature, professionally managed, and appealing to both institutional investors and strategic acquirers

Calder Capital Performance

As of October 31, 2025, Calder Capital generated $15.4M in revenue, a 15% increase over the same period in 2024. This leap is supported by 45 closed deals, up from 39 in 2024, reinforcing Calder’s upward trajectory in a volatile lower middle market.

Commentary from Max Friar, Calder’s Managing Partner:

Calder’s performance this year aligns with broader market sentiment, constructive but far from euphoric. Deal structures and valuation multiples have remained relatively stable, and while buyers are actively competing, there’s also a clear sense of caution. Many are favoring off-market opportunities when possible, which we see reflected in the continued growth of our buy-side client base.

While 2025 has been a record year for Calder in terms of closed deals and revenue, the growth feels healthy rather than explosive. One key dynamic we’re observing is the increase in seller activity; more owners are “testing the market.” That said, this trend presents challenges, especially for M&A firms operating on commission. It’s become increasingly difficult to assess seller seriousness, particularly in a market where some firms are slashing fees and bringing underqualified sellers to market.

Looking ahead to 2026, I anticipate that seller supply will continue to improve, which could further energize the market. At the same time, we expect strong ongoing demand for our buy-side services, as competition for quality deals remains intense.

One of the biggest unknowns is how private equity groups will behave. Will we start to see more exits, or will the trend of extending record hold periods persist?

$1-5MM

Market Activity and Sentiment

Deal Volume Trends

The M&A market showed mixed signals in Q3 2025, with deal activity diverging between the lower Main Street and the Middle Market.

Small business transactions gained momentum, according to BizBuySell, which reported 2,599 closed deals, an 8% increase year-over-year and an 11% rise from Q2. The uptick reflects growing buyer confidence, supported by stable interest rates, more active lenders, and increased seller readiness. Activity was particularly strong among businesses priced under $2M, where buyer demand remains robust.

In contrast, middle-market deal volume continued to soften. GF Data reported just 211 completed transactions year-to-date, down 27% compared to the first nine months of 2024. months. This marks the second consecutive quarterly decline, consistent with the seasonal summer slowdown but also reflective of persistent buyer caution. Higher financing costs, fewer high-quality deals on the market, and longer diligence timelines are all contributing to the drag in activity.

Deal volume in the mid-market will likely remain constrained until either financing conditions ease or sellers adjust expectations to reflect the new cost of capital environment.

Market Direction

Strategic buyers and funded searchers remained active, especially in B2B services and manufacturing. Seller activity also picked up modestly, though valuation expectations continue to be a sticking point in some deals, according to GF Data.

Looking ahead, sustained momentum will depend on continued rate stability and minimal political disruption heading into Q4.

political disruption heading into Q4.

Seller Conditions

Seller confidence improved slightly in Q3 2025 but remains below pre-2023 levels, according to the IBBA Market Pulse. Advisors still characterize the $1M–$2M segment as a “seller’s market,” with average sale-to-benchmark ratios holding steady at 94%.

However, many owners remain cautious. As Max Friar noted, two trends persist: sellers are hesitant to list due to weak 2024-2025 financials, yet many are engaging with direct buyer inquiries, often prematurely and without full market exposure.

The result is a quieter-than-expected seller pipeline, as uncertainty continues to delay broader go-to-market activity.

Valuation Multiples

Peercomps reported detailed valuation data for 384 deals in the $1–5M EV range. The overall average EBITDA multiple was 4.11x, and the average SDE multiple was 3.44x.

Across industries, EBITDA multiples were tightly clustered, reflecting a stable pricing environment with no sector meaningfully outperforming. Here’s how it breaks down:

Industry	Deals	Avg P/EBITDA
Manufacturing	24	4.08
Construction	29	4.02
Distribution	13	4.10
Services	164	4.18

Services leads slightly on valuation, with a 4.18x average and the largest deal volume by far. Its strong showing reflects consistent buyer interest in service-based businesses and the sector’s track record in small business M&A.

Construction sits marginally lower at 4.02x, and while the gap is small, it’s consistent with broader market caution around labor risk and margin volatility. Distribution and Manufacturing fall near the midpoint, though smaller sample sizes (particularly for Distribution) warrant some caution in interpreting those figures.

As expected in this deal size, SDE multiples trail EBITDA, landing at an average of 3.44x. This reflects typical small business characteristics: heavier owner involvement, more discretionary expenses, and greater reliance on normalized earnings adjustments.

Key takeaways:

• For sellers: An average selling price is in the 4.0–4.2x EBITDA range. Clean books and reduced owner dependence will make your business more attractive.
• For buyers: Pricing is relatively consistent across sectors. Focus due diligence on verifying add-backs and the sustainability of earnings.

Overall, Peercomps’ $1–5M averages align directionally with IBBA’s Q2 medians, once you factor in differences in methodology (average vs. median), slightly different size brackets (IBBA uses $2–5M), and time frame (YTD vs. quarterly snapshot).

Sentiment & Trends

Seller sentiment in the $1M–$5M range continued to improve in Q3, though it remains below the highs of 2021–2022, per the IBBA Market Pulse. Confidence has been buoyed by a slight drop in interest rates, though macro concerns, especially tariffs and inflation, still weigh on decision-making.

The $1M–$5M segment is drawing increased attention from private equity firms pursuing add-ons and strategics seeking tuck-ins. This “in-between” tier is large enough to be attractive but still price-sensitive in a shifting economy.

Calder’s Managing Partner, Max Friar, notes that buyer demand remains strong in recession-resistant sectors like home services, construction trades (HVAC, plumbing, fencing), infrastructure, and food manufacturing/distribution. In contrast, retail and restaurant activity remains muted.“We’re now starting to see the impact of tariffs in deal flow and buyer behavior,” Garrett Monroe, Sell-Side Managing Director, commented. “Increased costs on imported goods are putting pressure on margins in manufacturing and distribution, which has led to tighter due diligence and valuation adjustments in those sectors. At the same time, demand for recession-resistant service businesses, especially in trades, infrastructure, and food, remains strong, as buyers look for stable cash flows amid economic and geopolitical uncertainty.”

Deal Structure and Financing

Equity vs. Debt Composition

Deal structures remained consistent in Q3. According to the IBBA Market Pulse, seller financing averaged 15% in this range, with cash at close holding steady at 85–87%. SBA 7(a) loans remain a key funding source, though recent federal budget cuts and SBA restructuring have caused delays.

“Many sellers now understand that offering 10–20% seller financing helps get deals done,” added Friar.

Debt is still widely available, but lenders are tightening underwriting on businesses impacted by tariffs or margin pressure.

Leverage Metrics

SBA 7(a) loans remain the backbone of financing in this range, but recent program changes, including workforce reductions and reinstated lender fees, are beginning to cause delays and uncertainty in deal execution. Many buyers and lenders are shifting toward non-bank SBA partners to avoid processing bottlenecks.

Interest Rate & Lending Commentary

Interest rates remain elevated but have stabilized. Some lenders are offering rates as low as 7.5%, though tight underwriting persists, especially in sectors exposed to tariff risk or margin compression, according to the IBBA.

Seller financing is increasingly vital, with 62% of advisors calling it “very important” in today’s market.

“Seller financing is uncertainty’s friend, and we live in uncertain times,” commented Monroe. 

Buyer Dynamics

Buyer activity in the $1M–$5M range remained strong in Q3, with demand driven by both strategic acquirers and individual buyers despite macroeconomic headwinds.

According to the IBBA Market Pulse Report:

$1M–$2M Segment

• 52% of buyers were first-time buyers, continuing the trend of individuals entering business ownership through acquisition.
• 45% were “buying a job,” seeking stable cash flow and personal control.
• 31% were acquiring horizontal add-ons, signaling growing sophistication among individual operators.
• 49% of buyers were within 20 miles of the seller, local familiarity remains a key factor at this size.
  

$2M–$5M Segment

• Buyers were more likely to be strategic acquirers (24%) or serial entrepreneurs (22%).
• 36% pursued horizontal add-ons, often aiming to capture market share or geographic expansion.
• 46% were local or regional buyers, though the share of national interest is increasing slightly due to more virtual dealmaking.
  

Across both segments, buyer types are becoming more diverse. Funded searchers, family offices, and non-traditional PE-backed platforms are more active in the $2M–$5M space, especially in industries with recurring revenue or essential services.

More individual buyers are now backed by investor capital or SBA leverage, narrowing the competitive gap with strategic acquirers.

Economic Context

Trade Policies & Tariffs

The impact of 2025 tariff increases, announced earlier this year as part of former President Trump’s trade agenda, continues to ripple through the lower middle market, especially in manufacturing and distribution-heavy deals.

According to BizBuySell’s Q3 2025 Insight Report:

• 37% of business owners reported rising input costs tied to new or expanded tariffs.
• 26% cited declining profitability as a direct result of those cost pressures.
• Industries most impacted include manufacturing, distribution, automotive, and construction supplies.
  

In practice, this has translated into slower deal velocity and increased caution from both lenders and buyers evaluating tariff-exposed businesses.

Max Friar commented, “We’re seeing clear themes take shape. A growing number of lower middle market manufacturers across the U.S. are in distress or treading water. Many are delaying capital expenditures and holding back from going to market, uncertain about what’s next. There’s also been a surge in reshoring-related conversations; tariffs are part of it, but broader geopolitical and supply chain volatility are just as influential.”

Interest Rate Outlook

The Federal Reserve held rates steady again in Q3, maintaining the federal funds rate at 5.25%–5.50% as inflation remains sticky along with tight labor markets. Earlier hopes for a mid-2025 rate cut have faded, with Fed officials signaling a more prolonged “wait and see” approach into Q4 and early 2026, according to the Federal Reserve.

Adding to the uncertainty, the extended federal government shutdown in Q3 disrupted SBA operations and caused delays in 7(a) loan processing. While the shutdown was resolved within weeks, it exposed the fragility of SBA-dependent deal timelines.

“Any disruption in SBA processing, even if temporary, adds real complexity for buyers in this range who depend on leverage,” noted Monroe. “Deals didn’t fall apart, but they definitely slowed down.”

Lender sentiment remains cautious, particularly for deals in cyclical or margin-sensitive sectors. To compensate for high borrowing costs, buyers are increasingly requesting seller financing, earnouts, or price adjustments to keep debt coverage ratios in check.

Inflationary Pressures

Cost pressures remain a concern. According to BizBuySell’s Insight Report, sellers continue to report higher labor and input costs, with 28% citing reduced margins due to inflation.

However, recession-resistant sectors continue to attract strong buyer interest:

• Home services (e.g., HVAC, plumbing, restoration)
• Medical and dental practices
• Logistics and B2B services
  

Buyers remain focused on cash-flow stability and pricing power, with a premium placed on businesses that have successfully passed cost increases to customers or maintained margins despite inflation.

Looking Ahead

Forecast Summary

While the first quarter showed resilient fundamentals, Q2 and Q3 have brought more volatility as tariffs begin to ripple through supply chains and buyer confidence adjusts. Deals are taking longer, and diligence periods are expanding.

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 early 2026.

$5-10MM

Market Activity and Sentiment

Seller Conditions

Seller sentiment in the $5M–$10M range improved modestly in Q3 but remains below pre-2022 highs. According to the IBBA Market Pulse Report, advisors report increased seller willingness to engage, but only if their 2024 financials have recovered from prior-year softness.

Valuation expectations remain elevated, though more sellers are open to flexible deal structures to overcome buyer risk concerns. Max Friar notes that while many business owners are still hesitant to go to market, especially if 2024 performance was uneven, the best-positioned sellers are seeing extremely strong demand and competitive processes, particularly in essential services and infrastructure-related industries. According to Friar, “Two of our recent sell-side engagements illustrate how intensely buyers are fighting for quality businesses. An aggregates manufacturing company with $3M in EBITDA received 39 offers and a value-added distributor with $2M+ in EBITDA received 30 offers.”

“We’re seeing three types of sellers: those still sitting on the sidelines due to soft 2024-2025 numbers, those that are testing the market by taking buyer calls directly, and those that understand that it’s a sellers’ market and are engaging us to stir up intense competition,” added Friar.

Valuation Multiples

Peercomps reported 42 transactions in the $5–10M EV range in 2025. Valuation levels in this segment show a clear premium over smaller deals, with an average EBITDA multiple of 4.59x and an average SDE multiple of 4.14x.

Here’s the industry-level breakdown:

Industry	Deals	Avg P/EBITDA
Manufacturing	5	4.63
Construction	2	4.49
Distribution	2	4.55
Services	13	4.66

Though the sample size is limited, multiples are consistently elevated across sectors, with Services leading slightly at 4.66x. The pricing lift is not concentrated in any one vertical, but reflects a broader trend tied to company scale and deal quality.

Compared to the $1–5M range, the jump in valuation is notable:

• EBITDA multiples increase by ~12% (4.59x vs. 4.11x)
• SDE multiples increase by ~20% (4.14x vs. 3.44x)

This premium reflects the market’s preference for larger businesses with more institutional characteristics, professionalized teams, cleaner financials, more robust systems, and often, less reliance on the owner. The narrower gap between EBITDA and SDE multiples suggests less risk around add-backs and more confidence in the earnings quality at this level.

Key takeaways:

• For sellers: Businesses in this range typically attract a broader, more sophisticated buyer pool. To command the top end of the range, focus on clean financials, scalable infrastructure, and a credible succession or transition plan.
• For buyers: Higher multiples come with stronger fundamentals—less owner dependence, more process maturity, and fewer earnings adjustments. The pricing is higher, but so is the quality and durability of cash flows.

Peercomps’ $5–10M averages align directionally with IBBA’s Q2 medians, particularly when accounting for differences in methodology (median vs. average), slightly broader size brackets (IBBA uses $5–50M), and timing (YTD vs. point-in-time snapshots).

Sentiment & Trends

Seller sentiment in the $5M–$10M segment continued to improve slightly in Q3 2025, though it remains below pre-2022 levels. According to the IBBA, confidence is slowly rebounding as business performance stabilizes and interest rates hold steady. However, macroeconomic uncertainty, particularly around tariffs, input costs, and political risk, continues to temper seller enthusiasm.

This deal range continues to be a strategic sweet spot for many acquirers, particularly financial buyers (including private equity firms focused on add-ons) and corporate strategics looking for scalable platforms. These buyers are drawn to the greater operational maturity, team depth, and revenue scale typical in the $5–10M range.

However, acquisition criteria have tightened. Buyers are becoming more selective, placing increased weight on margin durability, recurring or contracted revenue, and low customer concentration. In today’s higher-cost capital environment, quality matters more than ever.

Deal Structure and Financing

Equity vs. Debt Composition

Deal structures in the $5M–$10M range remained relatively stable in Q3. According to the IBBA, cash at close averaged 86%, while seller financing made up 10–15% of most deal structures. Equity rollover is more common in this range, particularly in private equity-led transactions.

According to IBBA, 62% of advisors now consider seller financing “very important” in getting deals across the finish line.

“Sellers are more open to partial rollovers and structured earnouts, especially if it helps bridge valuation gaps,” noted Monroe.

Leverage Metrics

Traditional SBA 7(a) financing is less common in this range, but smaller deals under $7M still see SBA involvement. Recent SBA restructuring, including staffing cuts and the return of lender guarantee fees, has caused processing delays, leading many buyers to shift toward conventional or mezzanine debt structures.

Interest Rate & Lending Commentary

Interest rates have held steady, but at elevated levels. Commercial deal rates typically range from 7.5% to 9.0%, depending on deal size and sector risk. Underwriting remains tightest in manufacturing and distribution, particularly for businesses impacted by tariffs or supply chain volatility.

Buyer Dynamics

Buyer activity in the $5M–$10M range remained strong and competitive in Q3 2025, driven largely by private equity groups pursuing add-ons, as well as strategic acquirers seeking synergies in fragmented industries.

According to the IBBA:

• 59% of buyers in the $5M–$10M range were private equity firms, primarily executing add-on acquisitions.
• 64% were targeting horizontal add-ons, reflecting a strong appetite for geographic and market share expansion.
• 55% of buyers were located more than 100 miles from the seller, underscoring the national (and in some cases international) scope of buyer outreach at this level.
  

Family offices, funded searchers, and independent sponsors are also increasingly active in this range, especially in sectors with:

• Recurring revenue
• Strong margins
• Low customer concentration
• Resilience to economic and supply chain disruptions
  

“We’re seeing intense interest in infrastructure services, niche manufacturing, and B2B service companies with defensible cash flows,” noted Calder’s Sell-Side Managing Director, Garrett Monroe. “PE-backed platforms are moving quickly when the strategic fit is right, often with national footprints and remote integration strategies.”

Economic Context

Trade Policies & Tariffs

The ripple effects of the 2025 tariff increases, initiated under former President Trump’s trade platform, are being felt most acutely in manufacturing, distribution, and industrial supply businesses that commonly populate the $5M–$10M deal range.

According to the BizBuySell Insight Report:

• 37% of business owners reported rising input costs linked to tariffs on goods from China, Mexico, and key manufacturing regions.
• 26% cited reduced profitability tied directly to those increased costs.
• Heavily impacted industries include automotive parts, construction materials, industrial equipment, and general distribution.
  

For M&A, this has translated into slower diligence cycles and increased scrutiny from both lenders and buyers, particularly in deals where margin stability is uncertain. Tariff exposure is now a red flag that often leads to structured offers, conservative debt levels, or downward adjustments in valuation.

One emerging trend: a surge in reshoring conversations. Buyers are placing greater value on U.S.-based or vertically integrated suppliers, and sellers with diversified sourcing are commanding more favorable deal terms.

Interest Rate Outlook

The Federal Reserve held rates steady at 5.25%–5.50% in Q3, with no cuts expected until early 2026 as inflation and labor markets remain firm (Federal Reserve).

While SBA financing is less common in this range, the September 2025 government shutdown disrupted SBA operations and contributed to a more cautious lending climate overall. Lenders are increasingly conservative, especially in cyclical or margin-sensitive sectors.

“Even for larger deals, uncertainty around government-backed lending adds friction,” Friar noted.

Senior and mezzanine debt remain available, but structures are tightening. Typical leverage hovers around 3.0x–3.5x EBITDA, and buyers are relying more on seller financing, earnouts, or equity rollovers to manage coverage and reduce risk.

Inflationary Pressures

Cost pressures remain elevated. According to BizBuySell’s Q3 2025 Insight Report, 28% of sellers reported reduced margins due to rising labor and input costs.

Despite this, recession-resistant sectors continue to draw strong buyer interest, especially among private equity and strategic acquirers. High-demand industries include:

• Home services (HVAC, plumbing, restoration)
• Medical and dental practices
• Logistics and B2B services
  

Buyers are placing a premium on businesses with margin stability and pricing power, particularly those that have successfully passed cost increases to customers or maintained profitability despite inflation.

Looking Ahead

Forecast Summary

While the first quarter showed resilient fundamentals, Q2 and Q3 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.

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 early 2026.

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 economic headwinds worsen. Buyer activity is stable, though price expectations may diverge from valuations in uncertain sectors.

Disclaimer:

This Market Update is provided for informational purposes only and does not constitute legal, financial, investment, or other professional advice. The information contained herein is based on sources believed to be reliable; however, Calder Capital makes no representations or warranties, express or implied, as to the accuracy, completeness, or timeliness of the content. Market conditions are subject to change without notice, and past performance is not indicative of future results. Readers are advised to consult with their professional advisors before making any business or investment decisions. Calder Capital expressly disclaims any and all liability that may be based on the information contained in this report.

Q3 2025 | Market Update:
Business Transactions in the $10-25 Million Range

Introduction

This report analyzes market conditions for U.S. businesses transacting at enterprise values between $10 million and $25 million. Insights are drawn from Q2 2025 data compiled by KeyBanc Capital Market Reports, IBBA’s latest Market Pulse Report, PitchBook, DealStats’ Value Index, Plante Moran data, and Calder Capital’s Sell-Side and Buy-Side teams as of November 2025.

Calder Capital Performance

As of October 31, 2025, Calder Capital generated $15.4M in revenue, a 15% increase over the same period in 2024. This leap is supported by 45 closed deals, up from 39 in 2024, reinforcing Calder’s upward trajectory in a volatile lower middle market.

Commentary from Max Friar, Calder’s Managing Partner:

Calder’s performance this year aligns with broader market sentiment, constructive but far from euphoric. Deal structures and valuation multiples have remained relatively stable, and while buyers are actively competing, there’s also a clear sense of caution. Many are favoring off-market opportunities when possible, which we see reflected in the continued growth of our buy-side client base.

While 2025 has been a record year for Calder in terms of closed deals and revenue, the growth feels healthy rather than explosive. One key dynamic we’re observing is the increase in seller activity; more owners are “testing the market.” That said, this trend presents challenges, especially for M&A firms operating on commission. It’s become increasingly difficult to assess seller seriousness, particularly in a market where some firms are slashing fees and bringing underqualified sellers to market.

Looking ahead to 2026, I anticipate that seller supply will continue to improve, which could further energize the market. At the same time, we expect strong ongoing demand for our buy-side services, as competition for quality deals remains intense.

One of the biggest unknowns is how private equity groups will behave. Will we start to see more exits, or will the trend of extending record hold periods persist?

$10-25MM

Market Activity and Sentiment

Deal Volume Trends

M&A activity in the $10-25 million enterprise value (EV) range continued to climb through Q2 2025 into Q3 2025, despite macroeconomic concerns and volatility in the public markets.

According to Pitchbook’s Q3 2025 Global M&A Report, North American M&A deal activity accelerated in Q3 2025, rebounding from a flat Q2. Deal count increased 5% quarter-over-quarter, while deal value surged 23%, reaching $762.2 billion, a new quarterly record, surpassing the previous high, which was set in Q4 2021.

Despite this strong Q3 performance, KeyBank reports in its latest M&A Quarterly update that total deal volume remains down ~12% year-over-year compared to Q3 2024. However, Pitchbook data suggests that the market is on pace to close the year at $2.7 trillion in total value, exceeding the five-year average of $2.0 trillion, and solidifying 2025 as another strong year for M&A in North America.

Market Direction

The outlook for the end of 2025 remains cautiously optimistic. While dealmakers are still navigating inflation, interest rate uncertainty, and geopolitical instability, the market is underpinned by several supportive fundamentals:

• Near-record levels of private equity dry powder (over $950B, according to PitchBook)
• A growing backlog of companies ready to go to market once conditions stabilize
• Strong corporate balance sheets are fueling strategic acquisitions

Plante Moran states, “GDP bounced back strongly in Q2, as the U.S. economy grew at a brisk 3.3% clip — a marked reversal from Q1’s 0.5% contraction. Additional data provided a bit more bounce in the rebound from the previously reported 3.0% quarterly gain.” 

IBBA’s Q2 Market Pulse Report corroborates that sellers are moving forward with their exit plans, with data indicating that 76% of lower middle market advisors reported tariffs were not a major deterrent to deals. 

Meanwhile, DealStats’ Q4 2025 Value Index notes that overall, median EBITDA margins have been very subtly declining throughout 2025, with Q1 2025 margins at 16%, Q2 margins at 15%, and Q3 margins now at 14%. They report that since Q4 of 2019, the average EBITDA margins have not fallen below 11%. To compensate for this slight decline, transaction timelines and structure sensitivity have increased. As a result, buyers are placing greater weight on operational clarity and post-close risk mitigation.

“Despite a complex backdrop of elevated interest rates, geopolitical noise, and cautious sentiment, the fundamentals supporting M&A remain intact,” said Max Friar, Managing Partner of Calder Capital. “Private equity dry powder is near record highs, strategics are sitting on strong balance sheets, and buyers are preparing to strike once clarity returns. We’re seeing growing momentum under the surface, and when conditions stabilize, the dam will break, and we are already seeing evidence of pent-up M&A activity surface.”

Seller Conditions

The IBBA notes that seller market conditions in the $5–50M range remained strong, though valuations declined slightly compared to Q2 2024. The median EBITDA multiple for $5–50M deals was 4.8x, down from 5.5x. (IBBA Q2 2025 Market Pulse Report)

“Sellers who have realistic expectations and proper preparation are still receiving great outcomes,” said Garrett Monroe, Calder Capital Managing Director – Sell-Side. “But we are seeing more cases where businesses without strong management depth or clean financials are being asked to accept financial risk: whether in the form of seller notes, earnouts, or longer exit  timelines.”

Buyer Dynamics

“Buyers in this range are seeking quality over quantity,” stated Sam Scharich, Managing Director – Buy-Side. “For companies with recurring revenue, clean financials, and leadership in place, we’re seeing multiple offers. But those who aren’t prepared are facing hard questions or getting passed over.”

According to DealStats’ Q4 2025 Value Index, public-company buyers are consistently paying higher valuation multiples for private company targets than private buyers did across all NAICS sectors. This premium reflects not only potential synergies between public acquirers and their targets but also the size disparity in typical acquisitions; larger businesses tend to command higher multiples. This reinforces a broader trend noted throughout 2025: scale and operational clarity continue to drive premium valuations in an increasingly selective M&A environment.

Valuation Multiples

Dealstats reports that information businesses and utilities businesses are commanding record high multiples, while food services and other service sectors are receiving all-time low multiples. GF Data reports that the median multiple across all sectors in the $10-$25MM range is sitting at 6.4x year to date.

GF Data’s latest M&A Report provides us with the following median selling EBITDA multiples by sector: 

• Manufacturing:6.7x EBITDA (YTD)
• Business Services: 7.5x EBITDA (YTD)
• Distribution: 7.2x EBITDA (YTD)
• Technology: 6.7x EBITDA (YTD)

Yet, per the IBBA, $5–50M EV businesses are receiving median EBITDA multiples of 5.5x (up from 5.3x in Q2 2024).

Deal Structure and Financing

Equity vs. Debt Composition

According to DealStats’ Value Index for Q4 2025, year-to-date buyers are contributing an average of 94% of the purchase price as the down payment. Of that amount, approximately 41% is financed through bank loans, while 6% comes from seller financing and 4% from earnouts. Dealstats’ data suggests that loan amounts are decreasing as a percentage of the sale price, going from 66% in 2024 to 41% year to date.

Interest Rate & Lending Commentary

The lending environment in Q2 2025 was defined by continued caution among senior lenders, particularly regional and lower-middle-market banks, which remain hesitant to stretch on leverage due to interest rate volatility and credit quality concerns.

Although the Federal Reserve held rates steady at 5.25%–5.50%, markets are increasingly pricing in a dovish pivot by late 2025, which could unlock more favorable credit terms in the second half of the year.

Huntington reported fixed SBA 7(a) rates capped at 8.15% through October 31, 2025, with mandatory closings by January 15, 2026. While the Fed has held rates steady, lenders continue to tighten underwriting, increasing diligence timelines, and requiring more structure flexibility from sellers.

Private Equity

Buy-side engagement from PE firms remained strong despite a selective posture. PitchBook notes that dry powder remains high in U.S.-based Private Equity firms at roughly $1T, but many firms are reserving leverage for high-quality platform deals. Family offices and search funds are increasingly competing in this range of $10M-25M.

Firms with flexible capital structures and relationships with private credit providers are staying active, albeit more selectively.

Family Offices & High-Net-Worth Buyers

IBBA’s Q2 2025 Market Pulse Report highlights that family offices and high-net-worth individuals continue to be active and opportunistic buyers in the $25–50M space, particularly as competition from traditional PE players softens. These buyers are often more flexible on deal structure and return timelines, giving them a competitive edge in situations where sellers value certainty and cultural fit.

Family offices are especially drawn to companies with long-term cash flow stability, founder succession opportunities, and industries resistant to automation or regulatory disruption.

Strategic Buyers

Strategics remain focused on acquiring recession-resilient, complementary businesses. According to PitchBook, corporate carve-outs and horizontal add-ons continue to appeal to strategic buyers, who view them as opportunities for operational improvement or bolt-ons to accelerate growth. Many strategic buyers are pursuing geographic expansion or capability enhancement.

Economic Context

Trade Policies & Tariffs

Q2 2025’s reduction in cross-border M&A activity is largely in line with the broader M&A market, but has been further impacted by the current administration’s protectionist policies and aggressive tariff implementation. 

As Calder’s Managing Partner, 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.”

Sell-Side Managing Director, Garrett Monroe, confirms that diligence now includes tariff modeling, especially in manufacturing and distribution. 

Interest Rate Outlook

Macroeconomic Sentiment & Tariffs

Although trade tensions have consistently been a headline risk throughout the year, IBBA’s Q2 data suggests tariffs had limited influence on seller decisions. 76% of lower middle market advisors said fewer than 3% of their clients were delaying a sale due to tariffs.

As Monroe explains: “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.” Monroe notes that credit spreads and Fed policy currently support well-prepared sellers, even in a choppy environment.

Inflationary Pressures

Plante Moran’s recent article on Inflation states: “Inflation eased considerably since its 2022 peak, but it’s not “mission accomplished” for the Fed. Current figures remain above the central bank’s 2% target, and consensus estimates suggest a temporary reacceleration to the 3% range by late 2025 or early 2026 before receding back toward 2%. This uptick is expected to stem in part from tariff-related price adjustments — a reminder that inflation isn’t just about monetary policy, but also global trade dynamics as well as other sectors like healthcare and housing exhibiting persistent price increases.”

While labor and input costs remain above pre-pandemic norms, Monroe has observed stabilization in recent quarters, with many buyers now focused less on top-line growth and more on margin consistency, cost control, and lean operations. Businesses that can demonstrate stable margins and pricing power continue to stand out in buyer processes.

Consumer Demand Signals

According to KeyBanc’s Q2 2025 Capital Markets Report, consumer M&A activity declined modestly from Q1, yet valuations ticked upward, indicating sustained buyer interest in quality assets. In contrast, the technology sector volume dipped, but valuations increased slightly year-over-year, supported by continued capital deployment into AI and machine learning platforms.

Industrial M&A remained disciplined, with deal activity down slightly but valuations up materially versus recent historical averages. Investors remain focused on platform acquisitions in automation and industrial services, particularly where reshoring and supply chain stability are strategic drivers.

PitchBook’s Q3 sector momentum index indicated a strong increase in Q3 Deal Value for transactions in healthcare, IT, and financial services.

Looking Ahead

Forecast Summary

Q2 2025 continued to test the market’s resilience, and many of those pressures have persisted into Q3 and are expected to carry through year-end. While overall deal volume remains muted in the $10–25MM range, buyer interest in well-positioned companies, those with strong cash flow, reliable supply chains, and diversified customer bases, remains active.

Heading into Q4, buyer-side engagement remains strong, even as many sellers remain hesitant to enter the market amid persistent rate and policy uncertainty. The backlog of prepared sellers is growing, and with more clarity around interest rates or trade policy, the market could pivot quickly.

As Max Friar, Managing Partner of Calder Capital, stated: “Despite a complex backdrop of elevated interest rates, geopolitical noise, and cautious sentiment, the fundamentals supporting M&A remain intact. Private equity dry powder is near record highs, strategics are sitting on strong balance sheets, and buyers are preparing to strike once clarity returns. We’re seeing growing momentum under the surface, and when conditions stabilize, the dam will break.”

For now, the market remains highly selective. Well-prepared sellers can still achieve strong outcomes, while underperforming businesses may face valuation pressure or extended diligence timelines.

Disclaimer:

This Market Update is provided for informational purposes only and does not constitute legal, financial, investment, or other professional advice. The information contained herein is based on sources believed to be reliable; however, Calder Capital makes no representations or warranties, express or implied, as to the accuracy, completeness, or timeliness of the content. Market conditions are subject to change without notice, and past performance is not indicative of future results. Readers are advised to consult with their professional advisors before making any business or investment decisions. Calder Capital expressly disclaims any and all liability that may be based on the information contained in this report.

Q3 2025 | Market Update:
Business Transactions in the $25–100 Million Range

Introduction

This report examines M&A activity in the U.S. market for companies with enterprise values between $25 million and $100 million. It leverages Q2 2025 data from KeyBanc Capital Market Reports, IBBA, PitchBook, and internal insights from Calder Capital’s Sell-Side and Buy-Side teams. Companies in this range are typically mature, professionally managed, and appealing to both institutional investors and strategic acquirers.

Calder Capital Performance

As of October 31, 2025, Calder Capital generated $15.4M in revenue, a 15% increase over the same period in 2024. This leap is supported by 45 closed deals, up from 39 in 2024, reinforcing Calder’s upward trajectory in a volatile lower middle market.

Commentary from Max Friar, Calder’s Managing Partner:

Calder’s performance this year aligns with broader market sentiment, constructive but far from euphoric. Deal structures and valuation multiples have remained relatively stable, and while buyers are actively competing, there’s also a clear sense of caution. Many are favoring off-market opportunities when possible, which we see reflected in the continued growth of our buy-side client base.

While 2025 has been a record year for Calder in terms of closed deals and revenue, the growth feels healthy rather than explosive. One key dynamic we’re observing is the increase in seller activity; more owners are “testing the market.” That said, this trend presents challenges, especially for M&A firms operating on commission. It’s become increasingly difficult to assess seller seriousness, particularly in a market where some firms are slashing fees and bringing underqualified sellers to market.

Looking ahead to 2026, I anticipate that seller supply will continue to improve, which could further energize the market. At the same time, we expect strong ongoing demand for our buy-side services, as competition for quality deals remains intense.

One of the biggest unknowns is how private equity groups will behave. Will we start to see more exits, or will the trend of extending record hold periods persist?

$25-50MM

Market Activity and Sentiment

Deal Volume Trends

M&A activity in the $25–50 million enterprise value (EV) range remained subdued in Q2 2025, reflecting the broader slowdown across the lower middle market. According to KeyBanc Capital Markets’ Q2 2025 M&A Update, announced transaction volume in this range declined 23.9% year-over-year, signaling continued caution from both buyers and lenders in the face of macroeconomic headwinds.

Despite the drop in deal count, aggregate transaction value rose 11.2%, suggesting that while fewer deals closed, high-quality or larger assets are still commanding strong buyer interest and elevated valuations. This bifurcation continues to define the lower middle market, particularly in competitive sectors like tech-enabled services, specialty manufacturing, and healthcare.

Market Direction

The outlook for the end of 2025 remains cautiously optimistic. While dealmakers are still navigating inflation, interest rate uncertainty, and geopolitical instability, the market is underpinned by several supportive fundamentals:

• Near-record levels of private equity dry powder (over $950B, according to PitchBook)
• A growing backlog of companies ready to go to market once conditions stabilize
• Strong corporate balance sheets are fueling strategic acquisitions
  

In the $25–50MM EV segment, deal volume is still muted, but buyer-side engagement, measured by NDAs, IOIs, and initial diligence activity, is rising. Many buyers are preparing to move quickly once catalysts such as interest rate cuts or clearer Fed policy materialize. Until then, pent-up demand is accumulating, especially for scalable, recession-resistant businesses.

Seller Conditions

Despite broader market pressures, buyer demand remains strong for well-positioned companies in the $25–50MM range. According to Calder Capital’s Buy-Side Managing Director, Sam Scharich, businesses with clean financials, consistent margins, and verifiable growth potential continue to receive multiple offers and premium valuations.

As Calder Managing Partner Max Friar puts it, “If you’re a seller with clean financials, strong profits, a diversified customer base, and resilience to risks like AI disruption or tariffs, it’s still a fantastic time to go to market. This remains a strong seller’s market for well-positioned companies. However, if your business is shrinking or underperforming, the market will be far less forgiving.”

In this deal range, quality and preparation are driving outcomes. Sellers that can clearly articulate their value proposition and withstand diligence scrutiny are far more likely to achieve strong multiples, even in a slower deal environment.

Buyer Dynamics

According to the KeyBanc Capital Markets Q2 2025 Report, U.S. acquisitions of foreign targets declined by 21.7% year-over-year, with aggregate deal value falling 23.4%. This pullback was reflected in the $25–50M enterprise value range, where smaller acquirers often face greater challenges navigating cross-border complexities and financing constraints.

Despite the volume decline, buyer interest in international opportunities remains intact, particularly among strategic acquirers seeking to strengthen supply chains, gain access to proprietary technologies, or enter new geographic markets. However, heightened geopolitical risk, foreign regulatory scrutiny, and elevated financing costs have made buyers more selective, slowing deal velocity in this segment.

Valuation Multiples

According to KeyBanc Capital Markets’ Q2 2025 M&A Update, overall valuation multiples remained above recent historical averages, but deal-specific performance varied significantly by size and quality. While larger middle-market transactions ($500M–$1B) are achieving record-high EBITDA multiples, driven by a flight to scale, this trend has drawn capital and attention away from smaller deals.

In the $25–50MM segment, valuations softened slightly compared to 2024, reflecting increased buyer selectivity and heightened diligence thresholds. Deals involving businesses with recurring revenue, margin stability, and low customer concentration still attracted strong multiples according to GF Data.

Ongoing uncertainty around the Federal Reserve’s rate policy continued to weigh on buyer sentiment and financing availability, limiting aggressiveness on terms, particularly for businesses with operational red flags or industry-specific risks.

Looking ahead, buyers remain cautiously optimistic. With market participants anticipating potential rate cuts in late 2025 and facing strong pressure to deploy capital, many are preparing for increased activity once economic clarity improves. Until then, the valuation environment is expected to stay bifurcated, rewarding well-prepared sellers and penalizing underperformers.

Deal Structure and Financing

Equity vs. Debt Composition

According to GF Data’s Q2 2025 report, equity contributions in $25–50MM deals remained elevated at 50–55%. This trend reflects both tightened credit conditions and a growing emphasis on deal quality and lender bankability. Buyers are willing to inject more equity upfront in exchange for favorable seller terms or to ensure deal certainty.

Family offices and independent sponsors, in particular, have leaned more heavily on equity as access to senior debt remains constrained.

Leverage Metrics

Senior debt availability continued to be limited in Q2 2025, especially from regional and traditional lenders. 

To bridge financing gaps, dealmakers increasingly turned to structured capital, including seller notes, earnouts, and mezzanine debt, especially when targets presented issues like margin volatility, customer concentration, or limited recurring revenue. GF Data reports that nearly 60% of deals under $50MM in Q2 included some form of contingent consideration or subordinate financing.

Interest Rate & Lending Commentary

The lending environment in Q2 2025 was defined by continued caution among senior lenders, particularly regional and lower-middle-market banks, which remain hesitant to stretch on leverage due to interest rate volatility and credit quality concerns.

Although the Federal Reserve held rates steady at 5.25%–5.50%, markets are increasingly pricing in a dovish pivot by late 2025, which could unlock more favorable credit terms in the second half of the year.

Until then, most buyers in the $25–50MM EV segment are operating under conservative underwriting assumptions, heavier equity loads, and tight lender scrutiny. This dynamic is contributing to lower overall deal volume in the lower middle market, compared to upper-tier deals where scale, certainty, and institutional interest attract more aggressive financing.

Private Equity

In Q2 2025, private equity activity in the $25–50M EV range slowed modestly, with deal volume down year-over-year, largely due to ongoing caution around leverage and exit timing. According to GF Data, PE firms continue to prioritize add-on acquisitions over new platform investments, favoring lower-risk, bolt-on deals that require less upfront capital and integration risk. Add-ons in this range offer attractive valuation arbitrage opportunities, particularly in sectors like business services and industrials.

Despite soft volume, competition remains strong for high-quality targets, with well-capitalized PE firms holding record levels of dry powder and increasing pressure to deploy. Firms with flexible capital structures and relationships with private credit providers are staying active, albeit more selectively.

Family Offices & High-Net-Worth Buyers

IBBA’s Q2 2025 Market Pulse Report highlights that family offices and high-net-worth individuals continue to be active and opportunistic buyers in the $25–50M space, particularly as competition from traditional PE players softens. These buyers are often more flexible on deal structure and return timelines, giving them a competitive edge in situations where sellers value certainty and cultural fit.

Family offices are especially drawn to companies with long-term cash flow stability, founder succession opportunities, and industries resistant to automation or regulatory disruption.

Strategic Buyers

Strategic buyers remained the most active buyer group in the $25–50M EV segment during Q2 2025. As noted by KeyBanc Capital Markets Report, many strategics continue to use M&A to fill capability gaps, expand regionally, and build resiliency across supply chains, especially in response to inflation and geopolitical volatility.

However, with many large strategics having already completed major acquisitions in prior quarters, volume slowed as internal integration efforts took precedence. Strategic buyers continue to pay premiums for targets that offer proprietary technology, strong customer relationships, or vertical integration benefits.

Economic Context

Trade Policies & Tariffs

Q2’25’s reduction in cross-border M&A activity is largely in-line with the broader M&A market, but has been further impacted by the current administration’s protectionist policies and aggressive tariff implementation. 

As Calder’s Managing Partner, 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.”

Sell-Side Managing Director, Garrett Monroe, confirms that diligence now includes tariff modeling, especially in manufacturing and distribution. 

Interest Rate Outlook

Macroeconomic Sentiment & Tariffs

Middle-market companies in the $25–50MM EV range remain divided on the broader impact of tariffs and trade policy. According to KeyBank’s Middle Market Sentiment Pulse Survey (Q2 2025), 49% of respondents see tariffs as an opportunity, primarily to gain market share or grow domestic sales, while 51% believe tariffs negatively affect costs, demand, and sales.

Despite that divide, the survey shows that 91% of middle-market companies are actively managing tariff exposure, underscoring the significance of global trade dynamics in deal planning and diligence, particularly for manufacturers and distributors.

Additionally, 61% of respondents cited clarity on U.S. economic health as the most important factor guiding investment decisions, reflecting continued uncertainty around rate policy, inflation, and demand trends.

Rate Environment & Timing Strategy

Although the Federal Reserve has held interest rates steady at 5.25%–5.50%, volatility in capital markets and caution in lending remain key deal constraints. However, many buyers and sellers in the $25–50MM range are no longer frozen by rate uncertainty, particularly given stabilizing inflation and more predictable Fed messaging.

As Monroe explains: “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.” Monroe notes that credit spreads and Fed policy currently support well-prepared sellers, even in a choppy environment.

Inflationary Pressures

While labor and input costs remain above pre-pandemic norms, Monroe has observed stabilization in recent quarters, with many buyers now focused less on top-line growth and more on margin consistency, cost control, and lean operations. Businesses that can demonstrate stable margins and pricing power continue to stand out in buyer processes.

Consumer Demand Signals

According to KeyBanc’s Q2 2025 Capital Markets Report, consumer M&A activity declined modestly from Q1, yet valuations ticked upward, indicating sustained buyer interest in quality assets. In contrast, the technology sector volume dipped, but valuations increased slightly year-over-year, supported by continued capital deployment into AI and machine learning platforms.

Industrial M&A remained disciplined, with deal activity down slightly but valuations up materially versus recent historical averages. Investors remain focused on platform acquisitions in automation and industrial services, particularly where reshoring and supply chain stability are strategic drivers.

Calder Capital reports strong buyer demand in the $25–50MM consumer and services space, especially for recurring revenue models. 

Looking Ahead

Forecast Summary

Q2 2025 continued to test the market’s resilience, and many of those pressures are expected to persist through the end of the year. While overall deal volume remains muted in the $25–50MM range, buyer interest in well-positioned companies, those with strong cash flow, reliable supply chains, and diversified customer bases, remains active.

Sellers who stayed on the sidelines in 2025 may continue to wait for more favorable market conditions in 2026. However, buyers are still pursuing quality assets, and deals are getting done, particularly where businesses demonstrate operational stability and margin consistency.

As we conclude 2025, the market remains highly selective. Well-prepared sellers can still achieve strong outcomes, while underperforming businesses may face valuation pressure or longer timelines to close.

$50-100M

Market Activity and Sentiment

Deal Volume Trends

According to KeyBanc Capital Markets, M&A activity in the sub-$100 million segment saw a significant slowdown, with deal volume dropping 24.9% year-over-year, from 4,131 transactions in Q2 2024 to 3,102 in Q2 2025. Smaller middle-market deals continue to face notable headwinds, with lower close rates reported across the industry.

Market Direction

Despite these ongoing challenges, several underlying indicators suggest strength beneath the surface. The broader M&A market remains supported by near record-high levels of dry powder, a growing pipeline of pre-market deals, and strong corporate balance sheets.

The Federal Reserve held interest rates steady throughout Q2 2025, in line with market expectations. However, uncertainty around future rate cuts, global trade policies, and broader economic direction continues to weigh on sentiment. Many buyers and sellers are holding off on full engagement until clearer signals emerge.

Seller Conditions

Despite macroeconomic pressure, buyer appetite for high-quality assets remains robust. Well-prepared sellers with verifiable financial performance and stable margins continue to achieve premium valuations.

As Max Friar notes, “If you are a seller with clean financials, strong profits, a diverse customer base, and resilience against AI disruption or tariff exposure, it’s still an excellent time to go to market.” Conversely, companies facing operational challenges, margin compression, or revenue declines are seeing tepid buyer interest and lower valuations.

Valuation Multiples

Valuation metrics ticked up during the quarter. According to KeyBanc’s Capital Markets report, disclosed middle-market transaction multiples rose, with revenue multiples also increasing year-over-year. Overall, valuations in Q2 2025 exceeded recent historical averages, particularly for deals involving premium, recession-resistant assets.

Deal Structure and Financing

Equity vs. Debt Composition

In Q2 2025, deal structures in the $50–100MM segment continued to reflect a more conservative capital stack. According to GF Data’s Q2 2025 report, equity contributions averaged 53.4%, as buyers increasingly leaned on internal capital to overcome tighter lending conditions. This represents a continued upward trend from 2024, when average equity contributions in the same deal range were approximately 46.2%. The shift reflects lenders’ ongoing risk aversion in a high-interest-rate environment, with buyers often required to put in more equity to secure favorable terms or fill financing gaps left by more selective senior and mezzanine debt providers.

Private equity sponsors in particular have had to adjust expectations and inject more capital upfront, often in exchange for better control terms or structured earnouts to bridge valuation gaps.

Interest Rate & Lending Commentary

Consistent with prior quarters, interest rates and credit market conditions played a central role in shaping deal structures. The Federal Reserve held the federal funds rate steady through Q2 2025, maintaining the target range at 5.25%–5.50%, amid mixed inflation data and slowing growth indicators.

Despite the pause in rate hikes, the cost of capital remains historically high. Lenders remain selective and risk-sensitive, requiring stronger covenants, higher equity cushions, and more extensive diligence on projections and working capital assumptions.

Lenders are also pricing more conservatively. Middle-market loan pricing (all-in yields) averaged 8.5%–10.5% for senior facilities, depending on borrower quality and industry, with unitranche structures commanding rates north of 11% in some cases, according to Lincoln International’s Q2 2025 U.S. Middle Market Financing Update.

Buyer Dynamics

Buyers remain cautiously optimistic heading into the second half of 2025. While uncertainty around interest rate timing and broader economic policy continues to cloud near-term planning, expectations are rising for a more stable dealmaking environment. With pressure mounting to deploy record levels of dry powder, particularly in private equity, many buyers are preparing for a more active second half once market clarity emerges around inflation, monetary policy, and the 2026 election outlook.

According to PitchBook and Preqin data, U.S. private equity dry powder exceeded $950 billion entering Q3 2025, and a large portion of this capital is earmarked for middle-market and lower-middle-market deals.

While deal volume in the $50–100MM segment was down Y/Y in Q2 2025, buyer-side engagement, measured by NDAs signed, IOIs submitted, and diligence calls, is trending upward, suggesting many are preparing for a pivot in activity once rate cuts or economic policy stabilization take hold.

Private Equity

Private equity remains the dominant force in the $50–100MM market, particularly for platform acquisitions or add-ons with durable margins, recurring revenue, and scalable infrastructure.

Despite some valuation mismatch between buyers and sellers, PE sponsors are increasingly flexible in deal structuring, utilizing earnouts, seller rollover, and preferred equity, to bridge gaps and compete for quality assets. Many firms are also targeting add-on acquisitions, which tend to be easier to finance and integrate during periods of uncertainty.

The public market rally in Q2 2025, despite modest volatility, has also improved confidence in exit timing and portfolio company performance, helping some PE firms re-engage in acquisitions after a slower start to the year.

Family Offices & High-Net-Worth Buyers

Family offices and high-net-worth individuals continue to grow their presence in the $50–100MM deal space, particularly in founder-led and legacy businesses. With longer investment horizons and less pressure to exit within 5–7 years, these buyers are attractive partners for sellers focused on succession planning or cultural fit.

Family offices have been particularly active in recession-resilient sectors such as healthcare, niche manufacturing, and business services. Their flexibility around deal terms and post-close governance remains a key competitive differentiator, especially in processes where traditional PE groups might appear too aggressive or transactional.

Strategic Buyers

Strategics remain highly selective but opportunistic, especially in deals that can provide synergies, vertical integration, or geographic expansion. With corporate balance sheets still strong and debt serviceability improving due to stable interest rates, many strategics are actively monitoring deal flow, even if they’re moving more slowly through formal processes.

Key motivators for strategic buyers in this range include:

• Expanding customer base or recurring revenue streams
• Securing critical supply chain or talent
• Acquiring enabling technology
• Entering new markets with established infrastructure

Cross-border activity in this bracket has also ticked up, as U.S.-based companies look to consolidate operations domestically while foreign buyers explore footholds in the North American market.

Economic Context

Trade Policies & Tariffs

Cross-border M&A activity in the $50–100MM range declined in Q2 2025, reflecting broader market contraction, but with additional pressure from protectionist trade policies and renewed tariff enforcement under the current U.S. administration. These shifts have introduced complexity and caution into mid-market deals, especially in sectors with global supply chains.

As Max Friar, Managing Partner at Calder Capital, explains: “Pricing power is fragile right now. If your business relies on international components or contractors, buyers will press you on it.”

This has made foreign-sourced materials, international vendors, and cross-border customer concentration red flags in diligence processes. In manufacturing, distribution, and industrial services, common sectors in the $50–100MM range, buyers are requiring detailed visibility into sourcing, shipping costs, and tariff exposure before committing to full valuations.

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

These sentiments are echoed by Garrett Monroe, Sell-Side Managing Director at Calder, who confirms that tariff modeling is now standard in due diligence, particularly for deals involving component importation or international customers. Buyers are also placing greater emphasis on U.S.-based production capabilities and supplier diversification.

A recent Deloitte Global Trade Survey found that 63% of U.S. mid-market manufacturers are actively exploring reshoring or nearshoring, up from 42% in 2023, a trend directly impacting M&A valuations and buyer confidence in this range.

Inflationary Pressures

In the $50–100MM deal segment, input costs and wage inflation continue to affect valuations, though there are signs of stabilization. According to the U.S. Bureau of Labor Statistics, CPI inflation held steady at ~3.4% in Q2 2025, with wage pressure remaining particularly persistent in skilled labor markets, a key issue for mid-sized industrial, construction, and B2B service firms.

Calder’s Garrett Monroe reports that buyers in this segment are now prioritizing margin durability over growth projections, particularly in industries where customer pricing power is constrained: “Buyers are less focused on your top-line story and more focused on whether your margins can hold under cost pressure.”

In response, many sellers are emphasizing process efficiency, automation, and lean operating models to protect valuation. Diligence now routinely includes labor force analysis and gross margin consistency over trailing 12–24 months, especially in EBITDA-focused transactions.

Consumer Demand Signals

Buyer behavior in the $50–100MM space continues to reflect sector-specific discipline, with demand focused on recession-resistant, tech-enabled, or synergy-rich platforms.

• Industrial & Manufacturing: Deal volume in industrials fell slightly in Q2 2025, but valuations increased due to competition for quality assets. According to PitchBook’s Q2 2025 U.S. Industrials M&A Report, median EBITDA multiples in this segment rose up from Q2 2024, with strategic and PE buyers targeting automation-rich, margin-stable businesses. Tariff concerns and reshoring have made domestic operators with vertical integration particularly attractive.
• Technology: While tech deal flow in the $50–100MM range slowed somewhat, valuations remained firm. AI and machine learning firms, especially those offering vertical applications or proprietary IP, are still commanding premiums. Bain’s Mid-Year 2025 M&A Outlook reports revenue multiples for AI-driven tech firms in this range increased 6% YoY, even as broader deal volume declined.

Overall, buyers remain highly selective but are prepared to pay premium valuations for assets that demonstrate operational resilience, clear differentiation, and minimal geopolitical risk exposure.

Looking Ahead

Forecast Summary

Q2 2025 reinforced a divided market. While overall deal flow remained muted, buyers continued to compete for high-quality assets, especially in the $50–100MM range.

Many sellers remained on the sidelines, awaiting clearer signals on interest rates and economic policy. That trend may extend into early 2026. However, strong companies are still closing deals.

As Sam Scharich, Buy-Side Managing Director of Calder Capital, notes, “In Q2, profitable companies with strong supply chains and diverse customer bases are finding multiple offers. Everyone else needs to be ready to accept revised terms, or rethink timing.”

Heading into the second half of 2025, differentiation will drive outcomes. Sellers with clean financials and operational strength remain well-positioned, while others may need to focus on readiness before going to market.

Disclaimer:

This Market Update is provided for informational purposes only and does not constitute legal, financial, investment, or other professional advice. The information contained herein is based on sources believed to be reliable; however, Calder Capital makes no representations or warranties, express or implied, as to the accuracy, completeness, or timeliness of the content. Market conditions are subject to change without notice, and past performance is not indicative of future results. Readers are advised to consult with their professional advisors before making any business or investment decisions. Calder Capital expressly disclaims any and all liability that may be based on the information contained in this report.