Resiliency Amid Volatility: Three Key Trends Driving Middle Market M&A in 2025

Despite uncertainty, middle-market transactions are moving forward and companies and private equity firms are making strategic plays.

At a Glance

• While headlines forecast a cooling M&A market, we continue to see steady middle-market deal activity across multiple sectors.
• Buyers are targeting cash-flow businesses and bolt-ons, owners nearing retirement are seizing opportunities to sell, and private equity firms look to exit long-held portfolio companies.
• Proactive strategic planning across a range of areas, from transaction advisory to valuation and more, is critical for middle-market dealmakers.

M&A Isn’t Frozen – Just More Focused

Take one glance at recent headlines and you could conclude that U.S. middle-market M&A, like so much else in today’s economy, is at a standstill.

But middle-market deals are still happening, just more selectively. Private equity firms with plentiful dry powder are focusing on smaller buyouts, bolt-ons and roll-up deals (roll ups require a lot of cash due to their nature – multiple transactions), as those transactions demand less cash and are easier to finance. And aging business owners are preparing for transitions, regardless of what the Fed does on interest rates.

According to Pitchbook, a recent decline in global M&A megadeals reflects “a preference for mid-market transactions, which offer lower risk and faster integration.” That tracks with what we’re seeing across our own work with clients at CBIZ: deals haven’t disappeared, they’ve simply shifted focus.

Here are three key trends shaping middle-market M&A – and how to take advantage.

1. Deals Are Still Moving Despite Tariff Pressure

Though M&A got off to a strong start in 2025, most commentators anticipate a slowdown. This is largely due to new tariffs and trade policies, which create significant uncertainty around supply chains, future pricing, and company financial forecasts.

Recent headlines flash warning lights: “Tariff turmoil puts a freeze on global M&A dealmaking” (April 7, Reuters); “M&A Booms Globally, But Tariffs Freeze US Deals” (May 1, Global Finance Magazine). The latter cites Dealogic data showing global transaction volume hit a two-decade low in Q1 2025, even as total deal value remained stable. Similar headwinds are now hitting the U.S. middle-market.

But many middle-market buyers and sellers we work with aren’t putting deals on hold. Instead, they’re adjusting. One auto manufacturer has contingency plans in place, but hasn’t changed course. Meanwhile, a consumer products client has diversified production into lower-tariff countries and is leveraging country-of-origin rules to mitigate exposure. Updating cost management, transfer pricing and tax strategies—like a last in, first out (LIFO) inventory methodology—can also help organizations gain a competitive advantage in today’s saturated market. 

Ultimately, the message we’re hearing is that tariffs are being managed, not avoided. A common view among clients we speak with is that Trump is using tariffs as a negotiating tool and ultimately the dust will settle.

Though caution is certainly warranted, history illustrates that outside of interest rates and credit availability, very little—not the recession in ’08, not a global pandemic—truly slows down middle-market M&A. While interest rate uncertainty persists, the booming private credit market is helping to fill funding gaps, giving dealmakers more flexibility even with traditional lending tighter than usual.

2. Aging Owners are Driving Sell-Side Activity

There are roughly 300,000 middle-market companies in the U.S. with a combined revenue that amounts to over a third of private sector GDP. Many of those businesses are family-owned and privately held. With a historic number of Americans turning 65 and the potential expiration of estate tax benefits at the end of the year, an increasing number of those business owners are nearing retirement age and looking to sell—a generational force that is likely to transcend market volatility.

That said, these sellers often have different motivations. The key question for many is often not “Should I sell?” but “Who should I sell to?” Some business owners, for instance, have a bias against selling to private equity; others want to ensure the strategic buyer will maintain their legacy. The personal connection to the business makes the decision emotional as well as financial. What’s more, many lack experience with such transactions; after all, the sale of the business they built may be their first foray into M&A.

As a result, such sellers rely heavily on outside advisors. When evaluating options, they should seek out industry and transactional experts who understand what the seller is trying to achieve and who can tailor an array of different services to help get the best deal done—from ensuring employees are taken care of to devising a solid valuation to finding the right prospective buyers, detailing the tax implications of a given deal, protecting the firm from post-transaction liabilities, and more.

3. Buyers Still Want Cash Flow and Bolt-Ons

Another bright spot for middle-market M&A? Cash-flow businesses and bolt-on acquisitions.

That makes sense given the unpredictability in today’s market. In the past six months, we’ve seen several deals in areas like HVAC systems, roofing, and other contractor-based service companies that generate immediate cash flows, especially those with service agreements and recurring streams of revenue. These often take the form of bolt-ons, be it strategics rolling up a number of small businesses in a given region or PE firms looking to boost existing platforms.

We expect those strategies to persist throughout 2025. The main takeaway: if you have capital and are looking to scale, there’s value out there. Meanwhile, strategic buyers and PE firms are still on the hunt for companies with solid fundamentals, even if the transaction process may be slower.

Seizing Middle-Market M&A Opportunities in 2025

Though it may be too soon to tell what the rest of the year holds for middle-market M&A, the above drivers reflect cautious optimism—especially if interest rates stabilize. Other trends further support this sentiment. On the one hand, well-capitalized strategic buyers are still looking for opportunities and can’t afford to wait for more economic clarity. On the other hand, PE firms with longer-than-usual holding periods are looking for exits to maximize returns to limited partners, and seeking to deploy existing capital on new transactions.

Successfully managing today’s deal landscape, however, requires thoughtful planning. For example, informational valuations with “what-if” scenario analyses can be useful for prospective dealmakers. As valuations broadly decline in today’s market, opportunities for wealth transfer/estate planning, global tax reorganizations, and strategic value-based management planning abound.

For those ready to act now, bespoke advisory services with a consistent, trusted team can help get deals done—fast. For those in “wait-and-see” mode, strategic planning and operational improvements can create cost savings and help ensure a higher valuation down the road.

A best-in-class approach includes working with objective professionals who can assess strengths and weaknesses. Our professionals work with owners and key members of management to assess the business areas most impactful on enterprise value. With time on their side, proactive owners can reduce the risk of transactions failing and/or undervaluing their market value by following practical guidance.

While businesses will continue to go to market throughout the year and in every environment, owners should plan on the personal front as much as on the business front. Waiting until the heat of the sale or worse, after the sale, to consider the impact on their finances, tax obligations, and generational impact, misses out on opportunities. Enlisting the guidance of professionals like ours offers clarity and a lasting difference.

No matter where you are in the middle-market M&A spectrum, deals are there for the taking in 2025—if you’re ready to make them happen.