This report provides an analysis of transactions under $1 million in enterprise value, leveraging insights from BizBuySell’s Q4 2024 Insight Report and the IBBA Market Pulse for Q4 2024. This segment typically encompasses smaller Main Street businesses that often rely on individual buyers and SBA financing.

Sentiment and Trends

Market Activity:

Transactions under $1M continued to represent the majority of small business deal flow, with BizBuySell reporting a steady volume of 2,399 businesses sold in Q4 2024, reflecting a 5% year-over-year increase. Total enterprise value for these deals reached $2 billion, a 20% increase from Q3 2024.

IBBA Market Pulse data also indicated increased activity, with sellers in the <$500K and $500K-$1M segments averaging 1.78 and 1.96 offers per deal, respectively, suggesting healthy competition despite lingering financing challenges.

Seasonally strong Q4 activity was bolstered by sellers aiming to close before year-end and buyers looking to capitalize on stabilizing interest rates. However, broader election-related uncertainty limited any outsized transaction surge.

Inflationary Pressures and Performance Challenges:

Many businesses in the sub-$1M EV space are underperforming, with inflation continuing to erode profitability. According to the National Federation of Independent Business (NFIB), inflation remains a top concern, with 20% of owners identifying “Cost of Supplies/Inventories” as a critical issue. Rising expenses have created significant margin pressure, particularly in industries with thin operating margins. (ainvest.com)

The U.S. Census Bureau reported that 40% of small businesses experienced price increases in the past two weeks alone, further illustrating the rapid pace of cost escalation. Many small enterprises, particularly those in retail and service industries, have been unable to pass these costs onto consumers, resulting in declining profitability. (census.gov)

Additionally, insolvencies in the small business sector are rising as more owners struggle to keep pace with expenses. Some industries, such as local farming and independent retail, have reported surging costs of materials and labor, with little flexibility to increase prices. (foodandwine.com)

Seller Motivations:

Retirement and lifestyle changes remained the leading drivers for sellers, representing 65% of motivations in the <$500K segment and 56% in the $500K-$1M range.

Burnout accounted for 13% and 21%, respectively, reflecting the toll that recent economic uncertainties have taken on small business owners. Many owners who delayed exits in previous years now face businesses with reduced financial strength, making their enterprises less attractive to buyers.

Buyer Demand:

Buyer interest persisted at robust levels, particularly from individuals leaving corporate jobs and seeking cash-flowing businesses. First-time buyers accounted for 38% of buyers in this range, while serial entrepreneurs comprised 32%.

Search fund activity remained modest but growing, with niche investors targeting smaller add-ons within fragmented industries like home services and light manufacturing.

Valuation Multiples

SDE Multiples (IBBA & BizBuySell Data):

• Businesses under $500K EV averaged 2.0x SDE.
• Businesses between $500K-$1M EV averaged 2.8x SDE.
• The overall average across small business transactions was 2.57x SDE in Q4 2024.

Industry-Specific Multiples:

• Service Businesses: 2.5x-2.8x SDE, benefiting from stable cash flows and low reliance on physical assets.
• Restaurants/Retail: 2.0x-2.3x SDE, reflecting seasonal volatility and operational risks.
• Manufacturing: 2.3x-2.6x SDE, with capital intensity and supply chain pressures weighing on valuations.
• Home Services & Property Maintenance: 2.7x-3.0x SDE, commanding premium valuations due to steady consumer demand and recurring revenue models.

Deal Structure

Financing Composition:

Buyer equity (10-30%), seller financing (10-20%), and SBA loans remained the predominant financing structure.

Seller financing accounted for 12% of transactions in this range, while cash at close represented 83%, according to IBBA Market Pulse data.

Earnouts:

Rarely used in sub-$1M deals but occasionally employed when transition risk was elevated, such as businesses heavily dependent on the departing owner.

Buyer and Seller Behavior

Buyer Trends:

Individual buyers prioritized businesses with resilient cash flow, low capital requirements, and minimal owner dependency.

Recession-resistant industries, such as cleaning services, property maintenance, and essential retail, remained highly attractive.

Seller Preparation:

Calder Capital emphasizes that well-prepared businesses continue to attract stronger valuations and close faster.

Calder’s Exit Planning Services help sellers optimize financials, de-risk their operations, and present businesses in the best possible light to buyers.

Outlook for <$1M Deals

Q1 2025 and Beyond:

Calder anticipates steady deal flow in 2025 as burnout and post-election clarity brings pent-up sellers to market. However, Calder cautions that many businesses <$1M are not in great financial condition. Many have not adapted well to the inflationary pressures that have been faced for years. Additionally, even if a business has maintained consistent earnings, many are still less attractive: a business making $300K in 2019 is less attractive than a business making $300K in 2024.

Sellers who delayed exits in 2024 may reenter the market, while buyers remain eager to capitalize on resilient small businesses.

Conclusion

Transactions under $1M remain a robust and active segment of the market, driven by individual buyers and steady SBA financing options. Sellers should focus on preparing their businesses well in advance to address buyer concerns and maximize valuation.

This report provides an analysis of business transactions valued between $1 million and $5 million, leveraging insights from IBBA’s Q4 2024 Market Pulse Report, DealStats Value Index Q1 2025, and proprietary survey data from Calder (collected February 19-28, 2025). This segment encompasses businesses that typically attract individual buyers, search funds, and lower middle-market strategic acquirers. Transactions in this range often involve SBA 7(a) financing, bank lending, and private capital.

Sentiment and Trends

Market Activity:

• The $1M-$5M segment saw strong transaction activity in Q4 2024, with deal flow improving as interest rates stabilized and election-related uncertainty subsided.
• IBBA data indicated that businesses in this range received an average of 2.69 offers per deal, showing healthy demand from buyers.
• The segment continued to attract first-time business owners as well as strategic buyers looking to expand their market share through acquisitions.

Valuation Multiples

IBBA Market Pulse & DealStats Value Index Data:

• IBBA: Businesses in the $1M-$2M range transacted at an average 2.8x SDE multiple, while the $2M-$5M range saw 3.6x SDE multiples.
• DealStats: EBITDA multiples for the $1M-$5M segment increased from an average of 3.6x in 2023 to 3.7x in 2024.

Industry-Specific Multiples:

• Manufacturing: 3.0x-3.6x EBITDA, benefiting from supply chain stabilization and increased demand for specialized production.
• Business Services: 3.8x-4.5x EBITDA, driven by high recurring revenue and strong cash flow predictability.
• Construction: 2.9x-3.5x EBITDA, with valuations dependent on backlog strength and economic stability.
• Healthcare & Home Services: 4.0x-4.8x EBITDA, commanding a premium due to demographic-driven demand.
• Retail & Restaurants: 2.5x-3.0x EBITDA, reflecting operational risk and seasonal revenue fluctuations.

Buyer and Seller Behavior

Surge of Individual Buyers: 

The market has seen a significant influx of individual buyers, particularly those transitioning from corporate roles or seeking entrepreneurial opportunities. This surge has increased competition for quality businesses in the $1M–$5M range, leading to more aggressive bidding and, in some cases, inflated valuations (Forbes).

Challenges with Inexperienced Buyers: 

Many of these new entrants lack prior experience in business acquisitions, which can complicate negotiations and prolong deal timelines. Sellers are advised to thoroughly vet potential buyers to ensure they have the necessary resources and expertise to successfully close and manage the business post-acquisition.

Summary of Buyer Feedback from Calder Survey

Buyer interest in the $1M-$5M enterprise value range remains strong, particularly among individual buyers and independent sponsors, many of whom are corporate professionals seeking ownership opportunities. However, finding quality businesses remains the biggest challenge, with valuation concerns and competitive bidding creating barriers to deal closures. 

Many buyers in this range submitted IOIs or LOIs in 2024 but struggled to complete acquisitions due to pricing mismatches or being outbid by financial buyers. While most buyers expect business valuations to remain stable in 2025, some anticipate a decline due to economic uncertainty and tightening lending conditions, particularly for SBA-backed deals. Financing remains a mixed factor, with some buyers expecting easier conditions, while others cite prolonged high interest rates as a continued hurdle.

Outlook for $1M-$5M Transactions

Economic and Market Impact:

• The post-election period is expected to bring renewed deal-making activity, with buyers eager to close transactions before potential economic shifts.
• Further interest rate cuts are now less anticipated than they were in 2024. The Federal Reserve has signaled a more cautious approach given ongoing inflation concerns, leaving many market participants uncertain about whether borrowing costs will ease in 2025. If rates remain elevated, financing conditions for acquisitions may remain constrained, particularly for SBA-backed transactions.

Predictions for 2025:

• Expect continued strong demand in the $1M-$5M space, particularly for businesses in services, construction, and manufacturing.
• Valuation multiples should remain stable, though businesses with strong financials and growth potential will command premium pricing.
• More sellers may enter the market as confidence improves, leading to a healthier balance of supply and demand in the lower middle market.

Conclusion

The $1–5 million range offers robust opportunities for buyers and sellers, with diverse buyer dynamics and resilient transaction volumes. Sellers should focus on exit planning and preparation to capitalize on premium valuations and ensure smoother transitions. Calder Capital’s buyer database, deal structuring expertise, and targeted marketing position it as the go-to advisor for sellers in this range.

This report provides an analysis of business transactions valued between $5 million and $10 million, leveraging insights from the IBBA Q4 2024 Market Pulse Report, the DealStats Value Index Q1 2025, and additional market data. This segment is influenced by macroeconomic factors and shifting buyer dynamics, particularly the surge of individual buyers impacting valuations and deal structures.

Market Activity and Sentiment

Increased Deal Flow: 

The $5M–$10M segment experienced a surge in transaction activity during Q4 2024, attributed to stabilizing interest rates and the resolution of election-related uncertainties. Advisors reported higher buyer inquiries, leading to increased deal closures.

Seller’s Market Strength: 

The IBBA Market Pulse Report indicates a robust seller’s market in this segment, with 68% of advisors characterizing conditions as favorable to sellers. This reflects strong buyer competition and advantageous terms for sellers.

Valuation Multiples

EBITDA Multiples: 

According to the DealStats Value Index, EBITDA multiples for private company transactions in Q4 2024 ranged between 3.0x and 5.5x, depending on industry and financial performance.

Industry-Specific Multiples:

• Manufacturing: 4.8x – 5.2x EBITDA, driven by demand for automation and specialized production.
• Business Services: 4.0x – 4.5x EBITDA, benefiting from strong recurring revenue and low capital intensity.
• Construction: 3.0x – 4.0x EBITDA, influenced by project backlog and economic stability.
• Healthcare Services: 4.5x – 5.0x EBITDA, commanding higher valuations due to demographic-driven demand.
• Technology & Software: 5.0x – 5.5x EBITDA, reflecting premium valuations for scalable and IP-driven businesses.
• Retail & Restaurants: 3.0x – 3.5x EBITDA, impacted by consumer spending volatility and operational risks.

Deal Structure and Financing

Cash at Close Dominance: 

Transactions in the $5M–$10M range predominantly featured cash at close, comprising 88% of the deal value. Seller financing constituted a smaller portion, reflecting buyers’ preference for immediate ownership transfer and sellers’ confidence in receiving full value upfront.

Financing Conditions: 

While interest rate cuts were expected heading into 2025, recent inflation concerns have led the Federal Reserve to signal a more cautious stance on further cuts. Lending conditions remain tight, with 43% of advisors reporting more restrictive financing terms compared to the prior year. This has made access to traditional bank loans more challenging, particularly for smaller financial buyers.

Buyer Dynamics

Experienced vs. Inexperienced Buyers: 

The $5M-$10M segment continues to see demand from both financial and strategic buyers, including family offices and independent sponsors looking for scalable acquisitions. However, valuation expectations remain a sticking point, with many buyers citing overpriced businesses and competitive bidding as major obstacles to closing deals. Unlike the lower middle market, this range benefits from a more experienced buyer pool, though even seasoned acquirers struggled in 2024 due to sellers either withdrawing businesses from the market or increasing price expectations late in the process.

Private Equity & Strategic Buyers: 

Private equity firms and strategic acquirers remained active in this segment, seeking expansion opportunities. Their presence continues to drive competitive valuations, particularly for businesses demonstrating strong financial performance and growth potential. Given the continued challenge of deal sourcing, Calder’s broad buyer outreach and ability to generate multiple offers will be a key differentiator for sellers in maximizing exit value.

Calder’s Competitive Advantage:

Calder’s 200,000+ buyer database effectively connects sellers with entrepreneurial and strategic buyers, including niche investors and family offices. Calder’s proactive buyer recruitment ensures maximum exposure and competition for deals.

Economic Context

Interest Rate Uncertainty: 

The Federal Reserve has signaled a wait-and-see approach regarding further interest rate cuts in 2025. While previous expectations called for multiple reductions, recent economic data suggests a more measured approach, with potential delays in any additional cuts. This uncertainty affects leveraged transactions, with some buyers hesitating to move forward due to uncertain borrowing costs.

Inflation Concerns: 

While the economy shows resilience with strong employment rates and new business formations, persistent inflation remains a concern, keeping pressure on input costs and interest rates. Businesses remain cautiously optimistic, balancing growth opportunities with potential cost increases.

Exit Planning

Preparation Yields Premiums:

• Sellers in this range have the resources to prepare their businesses thoroughly, and doing so is critical to achieving higher valuations. Common areas of preparation include:
• Financial transparency (e.g., clean, audited financials).
• Reducing reliance on the owner for day-to-day operations.
• Addressing customer or supplier concentration risks.

Calder’s Exit Planning Services:

• Calder’s advisory services assist sellers in building buyer confidence and addressing risks early, enabling smoother negotiations and maximizing valuation.

Looking Ahead

The outlook for the $5M–$10M enterprise value segment remains positive, though economic conditions are shaping deal strategies. While demand remains strong, buyers are becoming more cautious due to interest rate uncertainty, inflationary pressure, and valuation mismatches. Sellers are encouraged to align price expectations with market realities and ensure businesses are well-prepared to attract serious buyers. With stabilizing economic conditions and sustained buyer interest, M&A activity is expected to remain healthy through 2025.

This report is based on data from the IBBA Q4 2024 Market Pulse Report, the DealStats Value Index, and additional market insights as of February 2025.

This report provides an analysis of business transactions valued between $10 million and $25 million, leveraging insights from the GF Data Q4 2024 M&A Report, the DealStats Value Index Q1 2025, and additional market research as of February 2025. This segment represents a critical tier in middle-market M&A, attracting a mix of private equity buyers, strategic acquirers, and high-net-worth individuals.

Market Activity and Sentiment

Deal Volume: 

GF Data tracked 94 completed transactions in Q4 2024, marking an increase from 82 deals in Q3 2024. While this rebound signals stronger activity, total transaction volume remains below historical peaks seen in prior years.

Valuation Stability: 

The average purchase price multiple for deals in this segment was 6.4x EBITDA in Q4 2024, up slightly from 6.3x in Q3 2024, indicating steady valuations. Full-year 2024 multiples for this segment averaged 6.4x EBITDA, up from 6.0x in 2023.

Seller’s Market Conditions: 

68% of advisors described market conditions as favorable for sellers, particularly for businesses with strong recurring revenue, proprietary products, or scalable operations.

Valuation Multiples

Industry-Specific Multiples:

• Manufacturing: 6.2x EBITDA, continuing an upward trend as financing conditions improved.
• Business Services: 6.4x EBITDA, maintaining consistent demand from private equity and strategic buyers.
• Distribution: 6.6x EBITDA, driven by increased add-on activity from PE-backed portfolio companies.

Premium for Above-Average Financial Performance: 

Businesses with above-average financials commanded a 7.0x EBITDA multiple, compared to 6.1x EBITDA for non-premium businesses. This premium spread widened in Q4, reflecting investor preference for quality assets.

Deal Structure and Financing

Equity vs. Debt Mix:

Senior debt financing averaged 40.3% of deal structures, up slightly from 39.2% in 2023.

Subordinated debt accounted for 11.0% of capital stacks, remaining stable from previous quarters.

Equity contribution averaged 48.7%, reflecting disciplined leverage in the market.

Leverage Trends:

Total debt/EBITDA: 3.1x, up from 2.9x in Q3 2024.

Senior debt/EBITDA: 1.6x, reflecting slightly more conservative lending standards.

Subordinated debt/EBITDA: 1.5x, signaling continued availability of mezzanine financing options.

Buyer Dynamics

Competitive Market: 

The $10M-$25M enterprise value range remains highly competitive, with financial sponsors, family offices, and strategic acquirers actively pursuing opportunities. While well-capitalized, buyers are selective and prioritize high-quality assets.

Challenges in Deal Execution: 

The primary barriers to closing deals in 2024 were valuation mismatches, unexpected business performance declines during due diligence, and sellers withdrawing late in the process. Competitive bidding remains strong, though buyers are wary of overpaying, particularly in an evolving economic landscape.

Private Equity Activity:

Add-on acquisitions accounted for 40% of tracked deals.

Platform deals saw a resurgence in Q4, suggesting PE firms are more willing to deploy capital toward standalone investments rather than just portfolio expansion.

Increased Family Office Interest:

More family offices pursued transactions in the $10M-$15M TEV range.

However, some first-time acquirers in this space struggled with financing, as traditional lenders remained cautious.

Strategic Buyers in Industrial and Business Services:

Corporate acquirers were particularly active in business services and industrial distribution.

Many leveraged synergies to justify paying higher multiples, especially for companies with established customer contracts.

Calder’s Unique Advantage:

Calder’s 200,000+ buyer database ensures sellers in this range are exposed to highly qualified buyers, including niche family offices, private equity firms, and strategic acquirers. Calder’s marketing strategy emphasizes precision targeting, ensuring optimal buyer-seller matches.

Economic Context

Interest Rates: 

While rate cuts were widely expected heading into 2025, recent inflation data has tempered expectations of further reductions. The Federal Reserve has signaled that it is not committed to additional cuts unless inflation shows clearer signs of easing, leaving some uncertainty for buyers reliant on leverage.

Inflationary Pressures: 

While inflation eased in some sectors, persistent price pressures in labor and materials continue to influence deal pricing and margin expectations.

Lender Sentiment: 

Bank lending remains selective, favoring companies with strong recurring revenue, diversified customer bases, and proven management teams.

Exit Planning

Preparation is Key:

• Sellers in this range can command premium valuations with thorough preparation. Key areas include:
• Professionalizing financial reporting (e.g., audited statements).
• Developing a strong second-tier management team to reduce reliance on the owner.
• Diversifying customer and supplier bases to mitigate concentration risks.

Calder’s Exit Planning Services:

• Calder’s advisory services help sellers address operational gaps, enhance valuation drivers, and streamline the sales process.

Looking Ahead to 2025

The $10M-$25M M&A market remains resilient heading into 2025, though financing constraints and macroeconomic uncertainty could shape buyer strategies. While quality businesses with strong fundamentals will continue to command premium valuations, sellers should prepare for increased scrutiny in due diligence. Sellers considering an exit should ensure their financials and operations are optimized to attract strategic and financial buyers.

This analysis integrates data from the GF Data Q4 2024 M&A Report, the DealStats Value Index Q1 2025, and additional market insights as of February 2025.

This report provides an analysis of business transactions valued between $25 million and $50 million, leveraging insights from the GF Data Q4 2024 M&A Report, the IBBA Q4 2024 Market Pulse Report, the DealStats Value Index Q1 2025, and additional market insights from S&P Global, SPS Deal Origination Benchmark Report, and recent economic developments as of February 2025. This segment attracts significant attention from private equity firms, family offices, and strategic acquirers.

Market Activity and Sentiment 

Deal Volume: 

GF Data recorded 75 completed transactions in Q4 2024 for this range, a modest increase from 63 in Q3 2024, but early 2025 indicators suggest potential headwinds due to new economic policy shifts.

Economic Uncertainty: 

The imposition of new tariffs by the U.S. administration in early February 2025 has introduced volatility into the market. These tariffs, targeting imports from Canada, Mexico, and China, are expected to disrupt supply chains and increase production costs, potentially dampening M&A activity. (apnews.com)

Valuation Multiples

Industry-Specific Multiples:

• Manufacturing: 6.4x EBITDA, but tariff-driven cost increases could pressure valuations.
• Business Services: 7.2x EBITDA, with stable demand but potential client budget reductions due to economic uncertainty.
• Distribution: 6.9x EBITDA, though impacted by rising logistics costs due to trade policy changes.

Premium for Above-Average Financial Performance: 

Businesses with above-average financials commanded a 7.2x EBITDA multiple, compared to 6.6x EBITDA for non-premium businesses. The spread widened in Q4 as capital deployment favored quality assets.

Deal Structure and Financing

Equity vs. Debt Mix:

• Senior debt financing: 42.1% of total deal structures, up from 41.0% in 2023.
• Subordinated debt: 10.5%, remaining stable compared to prior quarters.
• Equity contribution: 47.4%, as deal sponsors maintained disciplined leverage.

Leverage Trends:

• Total debt/EBITDA: 3.6x, up from 3.4x in Q3 2024.
• Senior debt/EBITDA: 2.4x, showing continued lender conservatism.
• Subordinated debt/EBITDA: 1.2x, slightly increasing due to renewed mezzanine financing availability.

Financing Conditions: 

The Federal Reserve has indicated a cautious approach to adjusting interest rates in 2025. While rate cuts were initially expected, tariff-induced inflation concerns have created uncertainty regarding the Fed’s next move. (federalreserve.gov)

Buyer Dynamics

Private Equity:

• PE firms remained active, with add-on acquisitions accounting for 45% of tracked deals.
• Platform acquisitions gained traction, indicating renewed interest in standalone investments with strong growth potential.

High-Net-Worth and Family Office Buyers:

• Family offices increased participation in this segment, particularly for businesses with strong cash flows and operational resilience.
• Some first-time acquirers faced challenges securing financing amid lender scrutiny.

Strategic Buyers:

• Corporate acquirers were particularly active in industrial services and niche manufacturing, leveraging synergies to justify higher valuations.
• Many strategic buyers deployed capital expenditure synergies as a justification for acquisition premiums.

Economic Context

Tariffs and Trade Policies: 

The U.S. administration’s recent 25% tariffs on imports from Mexico and Canada, along with an additional 10% on Chinese goods, have raised concerns about supply chain disruptions and production costs. (apnews.com)

Consumer Demand Weakening: 

Data from January 2025 shows a 0.2% decline in consumer spending, signaling a potential slowdown in discretionary markets. (barrons.com)

Federal Reserve Policy: 

While inflation has shown signs of easing, the Federal Reserve remains cautious. Tariff-induced price increases and weakening consumer demand contribute to uncertainty regarding future rate cuts. (federalreserve.gov)

Exit Planning

Exit Planning

Maximizing Value Through Preparation:

• Sellers in the $25–50M range are more likely to invest in extensive preparation, including:
• Formalizing governance and management structures.
• Auditing financials for transparency and consistency.
• Diversifying revenue streams and reducing key dependencies (e.g., owner involvement or customer concentration).

Calder’s Exit Planning Services:

• Calder assists sellers in aligning their businesses with buyer expectations, addressing operational risks, and positioning businesses for competitive bidding processes.

Looking Ahead

The M&A landscape in the $25M–$50M segment faces a period of heightened uncertainty. Businesses and investors must navigate the complexities introduced by new trade policies, inflationary pressures, and potential shifts in consumer behavior. A thorough understanding of industry-specific impacts and a flexible approach to deal structuring will be essential in adapting to the evolving economic environment.

This analysis integrates data from GF Data, the IBBA Market Pulse Report, the DealStats Value Index, S&P Global, the SPS Deal Origination Benchmark Report, and recent economic reports as of February 2025.

Q1 2025 Market Update: Business Transactions in the $50–100 Million Range

This report provides an analysis of business transactions valued between $50 million and $100 million, leveraging insights from the GF Data Q4 2024 M&A Report, the DealStats Value Index Q1 2025, S&P Global M&A reports, and the SPS Deal Origination Benchmark Report. This segment primarily attracts private equity firms, larger family offices, and strategic corporate acquirers.

Market Activity and Sentiment

Deal Volume: 

GF Data tracked 82 completed transactions in Q4 2024 for this segment, a slight decline from 94 in Q3 2024. The decrease reflects a tightening in leveraged buyouts due to ongoing economic uncertainties.

Valuation Stability: 

The average purchase price multiple for deals in this range was 8.3x EBITDA, down from 8.7x in Q3 2024. While still within historical norms, the decline suggests that buyers are factoring in economic risks more heavily.

Shift in Buyer Strategy: 

Larger private equity firms have been increasingly active in platform acquisitions rather than add-ons, signaling a renewed interest in long-term value creation rather than pure roll-ups.

Valuation Multiples

Industry-Specific Multiples:

• Manufacturing: 8.6x EBITDA, reflecting high demand for advanced manufacturing and technology-enabled industrials.
• Business Services: 8.4x EBITDA, maintaining strong investor appetite due to asset-light, recurring revenue models.
• Distribution: 7.9x EBITDA, experiencing slight declines due to tariff concerns impacting supply chain efficiency.

Premium for Above-Average Financial Performance:

Businesses with superior financials commanded a 9.2x EBITDA multiple, compared to 7.5x EBITDA for lower-performing businesses. This suggests a widening gap in pricing between quality and non-quality assets.

Deal Structure and Financing

Equity vs. Debt Mix:

• Senior debt financing: 37.8% of total deal structures, a decrease from 41.3% in Q3, indicating tighter credit conditions.
• Subordinated debt: 12.3%, reflecting continued reliance on mezzanine financing where traditional bank lending has pulled back.
• Equity contribution: 49.9%, the highest in two years, showing increased caution among lenders and sponsors.

Leverage Trends:

• Total debt/EBITDA: 4.2x, down from 4.4x in Q3 2024.
• Senior debt/EBITDA: 3.1x, as lenders continue to impose stricter underwriting standards.
• Subordinated debt/EBITDA: 1.1x, stable from the previous quarter.

Buyer Dynamics

Private Equity:

• Large PE firms have shifted back toward platform acquisitions, focusing on longer-term value creation.
• Add-on acquisitions dropped slightly, accounting for 38% of transactions, compared to 42% in Q3.

Corporate Strategic Buyers:

• Corporate buyers were particularly active in technology-driven manufacturing and business services, utilizing acquisitions to enhance capabilities and expand global reach.
• Many strategic buyers are deploying cash reserves aggressively, offering competitive valuations for synergistic deals.

Family Offices & Institutional Investors:

• Family offices have increased participation in this segment, targeting companies with long-term cash flow stability.
• Institutional investors, particularly pension funds and sovereign wealth funds, are stepping in as alternative lenders, filling gaps left by more conservative traditional banks.

Economic Context

Tariff Impacts: 

The U.S. administration has suggested imposing 25% tariffs on imports from Canada and Mexico, along with 10% tariffs on Chinese goods, but as of now, these measures have not been implemented. The lack of clarity regarding trade policy has contributed to uncertainty in the market, leading some businesses to delay investment decisions and adjust supply chain strategies in anticipation of potential cost increases. If the tariffs take effect as stated, the likely consequences include higher material costs, supply chain disruptions, and margin compression, particularly in manufacturing and distribution. (apnews.com)

Consumer Demand Weakening: 

Economic data from January 2025 suggests consumer spending declined by 0.2%, raising concerns about business growth trajectories. (barrons.com)

Federal Reserve Policy: 

The Federal Reserve remains noncommittal on further rate cuts, citing uncertainty about inflation persistence and economic growth. (federalreserve.gov)

Private Credit Surge: 

With traditional banks remaining cautious, private credit funds and direct lenders have stepped up financing for M&A, providing more flexible terms to well-positioned borrowers.

Exit Planning

Maximizing Value:

• Sellers in this range must invest in extensive preparation to achieve premium valuations. Key focus areas include:
• Professionalizing Management: Ensuring strong leadership to sustain operations post-exit.
• Financial Transparency: Clean, audited financials to build buyer confidence.
• Reducing Concentration Risks: Diversifying customer and supplier bases.

Calder’s Exit Planning Services

• Calder assists sellers in optimizing value by addressing operational inefficiencies, preparing financials, and positioning businesses for competitive bidding.

Looking Ahead

The $50M-$100M M&A market remains active but is facing increased complexity due to shifting economic policies, trade barriers, and mixed economic signals. Buyers and sellers alike must adopt a more strategic, data-driven approach to valuation and deal structuring. Businesses with strong financials, recurring revenue, and differentiated market positions will continue to attract premium valuations in this competitive landscape.

The $50–100M EV segment represents a mature and highly competitive market, where sellers can achieve premium outcomes by thoroughly preparing their businesses and leveraging expert advisors. Calder Capital’s extensive buyer network, market positioning expertise, and tailored exit planning services make it the partner of choice for sellers in this range.

Q1 2025 Market Update: Business Transactions in the $100 Million and Above Range

This report provides an analysis of business transactions valued at $100 million and above, leveraging insights from the KeyBank Capital Markets Report Q4 2024, GF Data Q4 2024 M&A Report, DealStats Value Index Q1 2025, and S&P Global M&A reports. This segment primarily attracts major private equity firms, sovereign wealth funds, and multinational corporate acquirers.

Market Activity and Sentiment

Deal Volume: 

KeyBank reported 167 completed transactions in the $100M-$250M range in Q4 2024, a 11.3% increase from Q3, marking a rebound in mid-sized large-cap deals.

Aggregate Transaction Value: 

While deal volume rose, aggregate transaction value declined 19.1% YoY, indicating that despite increased activity, buyers are becoming more price-conscious.

Election and Interest Rate Impact: 

With the U.S. general election concluded, M&A sentiment is shifting as investors evaluate the new administration’s economic policies. The Federal Reserve’s two rate cuts in Q4 provided marginal relief, but uncertainty remains regarding long-term rate trends.

Valuation Multiples

Transaction Size-Based Multiples:

• $100M-$250M: 8.3x EBITDA, down from 9.0x in Q4 2023.
• $250M-$500M: 10.5x EBITDA, a 15.5% YoY decline reflecting macroeconomic uncertainty.
• $500M-$1B: 10.8x EBITDA, indicating 16.3% growth QoQ, suggesting larger transactions remain competitive.
• Above $1B: 12.3x EBITDA, reflecting stronger investor confidence in high-quality assets.

Industry-Specific Multiples:

• Technology: 11.9x EBITDA, with artificial intelligence and automation driving premium valuations.
• Healthcare: 9.7x EBITDA, as investors navigate regulatory shifts and reimbursement uncertainties.
• Energy & Infrastructure: 8.1x EBITDA, impacted by volatility in commodity pricing.
• Industrial & Manufacturing: 8.8x EBITDA, with a focus on operational efficiencies and nearshoring trends.

Deal Structure and Financing

Equity vs. Debt Mix:

• Equity contribution: 48.9%, increasing as debt financing tightens.
• Senior debt financing: 40.3%, stable from Q3 2024.
• Subordinated debt: 10.8%, slightly rising as alternative credit providers fill gaps left by banks.

Leverage Trends:

• Total debt/EBITDA: 4.4x, down from 4.7x in Q3, indicating conservative lending.
• Senior debt/EBITDA: 3.2x, reflecting lender caution despite lower Fed rates.

Buyer Dynamics

Private Equity:

• Dry powder remains at near-record levels, increasing pressure to deploy capital.
• PE firms shifted toward platform acquisitions, with add-ons comprising only 36% of transactions, a 6% drop YoY.

Strategic Buyers:

• Multinational corporations focused on cross-border acquisitions, particularly in technology and healthcare.
• Integration synergies are a key driver of valuation premiums in the $500M+ range.

Sovereign Wealth and Institutional Investors:

• Foreign sovereign wealth funds are targeting U.S. assets, with 17.1% of total U.S. M&A activity in Q4 linked to foreign buyers.
• Pension funds and endowments are increasing allocations to direct investments.

Economic Context

Interest Rate Uncertainty: 

The Federal Reserve has indicated that only two additional rate cuts are expected in 2025, leaving the market uncertain on future borrowing costs.

Election Policy Effects: 

Investors are assessing potential corporate tax reforms and trade policy shifts under the new administration, which could impact deal structuring and post-merger integration.

Global M&A Trends: 

Cross-border dealmaking declined 8.1% in Q4 YoY, particularly foreign acquisitions of U.S. assets, driven by regulatory and policy concerns.

Looking Ahead

The $100M+ M&A market is experiencing higher deal volume but lower aggregate valuations, as investors take a more cautious approach to pricing and financing. The combination of election-related policy changes, interest rate uncertainty, and global trade dynamics will shape deal flow in early 2025. High-quality assets with strong cash flows, proprietary technology, or synergies with existing operations will continue to command premium multiples.

This analysis integrates data from KeyBank Capital Markets, GF Data, the DealStats Value Index, and S&P Global as of February 2025.