As we approach 2025, the mergers and acquisitions landscape for mid-market businesses is evolving rapidly. Economic volatility, shifting customer behaviours, technological advances and a growing emphasis on sustainable practices are shaping these changes. For mid-market companies, understanding the 2025 M&A trends is essential to preparing for opportunities, positioning for growth and navigating potential risks.
This article explores the key M&A trends expected to impact mid-market businesses in 2025, offering insights into the current environment and guidance on how to strategically respond.
A Return to Strategic M&A Activity
While recent economic uncertainty has tempered M&A activity in certain sectors, 2025 is likely to see a resurgence in strategic deals. Many companies are pivoting from crisis management to proactive growth, with larger corporations looking to bolster capabilities, diversifying product offerings and expand market share through strategic acquisitions. For mid-market companies, this environment represents an opportunity to align with well-capitalised buyers seeking complementary capabilities or niche market areas.
Mid-market companies with unique value propositions, such as specialised technology, strong customer relationships or proprietary expertise, are well-positioned to attract strategic buyers. Companies should be prepared to showcase their unique strengths and how they can add long-term value to prospective buyers.
Rising Interest in ESG-Driven Acquisitions
Environmental, social and governance factors have gained prominence in recent years, and this trend is set to intensify in 2025. Both private equity firms and strategic acquirers are increasingly incorporating ESG considerations into their investment strategies, driven by regulatory pressures, investor expectations and consumer demand. For mid-market companies that have integrated sustainable practices or hold strong social values, this trend could enhance their appeal to ESG-conscious buyers.
Companies aiming to leverage this trend should assess and enhance their ESG practices, both to align with market expectations and to add value in potential M&A discussions. This may include environmental initiatives, diversity and inclusion policies and strong governance frameworks that highlight the company’s commitment to sustainable growth.
Continued Growth in Technology and Digital Transformation
Technology remains a primary driver of M&A activity across industries, and 2025 is expected to see a continued emphasis on acquiring digital capabilities. Mid-market companies offering tech-driven solutions or those with mature digital capabilities will attract significant attention. Meanwhile, businesses in traditional sectors are investing in digital transformation to stay competitive, making technology acquisitions a critical strategy for growth.
For mid-market companies, it is essential to either bolster internal digital capabilities or, for those in technology-driven sectors, emphasise their tech advantage. M&A discussions will increasingly focus on how well a company’s technology stack aligns with industry needs, so companies should highlight digital strengths such as data analytics, automation, or e-commerce platforms.
Cross-Border M&A Rebounds with Resilient Sectors
2025 is anticipated to be a year of renewed cross-border M&A activity. While regulatory complexities persist, sectors resilient to economic fluctuations, such as healthcare, technology and infrastructure, are driving much of this activity. Mid-market companies in these sectors are well-positioned to attract international buyers, particularly those seeking to enter new markets or diversify revenue streams.
Mid-market businesses with an international footprint or growth potential should prepare to showcase their capacity for global operations. This includes regulatory compliance, established distribution networks and knowledge of local markets, all of which can be attractive to foreign investors looking to expand their presence in stable economies.
Increased Use of Earnouts and Contingent Considerations
Market volatility has led to a shift in deal structures, with earnouts and other contingent considerations becoming increasingly common. These mechanisms are particularly relevant in mid-market transactions, allowing buyers and sellers to bridge valuation gaps while managing risk. In 2025, expect earnouts to remain a popular feature in M&A agreements, especially in high-growth or uncertain sectors.
Mid-market sellers should prepare for flexible deal structures that may include performance-based milestones or earnout payments. By setting realistic growth targets and being open to contingent payment models, companies can enhance the appeal of their business to buyers, especially those concerned with short-term volatility.
Private Equity’s Continued Expansion into Mid-Market Deals
Private Equity (PE) firms are increasingly targeting the mid-market as they seek to deploy capital in promising but underdeveloped businesses. Given the increased competition for high-quality deals, 2025 will likely see PE firms continue to focus on mid-sized companies with growth potential. This trend benefits sellers seeking both capital and operational expertise, as PE firms often bring resources and experience in driving efficiency and scaling businesses.
Mid-market companies considering a sale should be aware of PE interest in their segment and the value PE firms can bring through investment, strategic partnerships and access to broader networks. Preparing the company for an exit by ensuring strong governance, clear growth plans and scalability can be advantageous.
Talent Acquisition as a Core M&A Driver
In a struggling labour market, talent acquisition has become a primary motivator for M&A, particularly for companies struggling to fill skill gaps internally. As companies navigate an increasingly knowledge-driven economy, acquiring businesses with skilled teams, particularly in tech, finance and engineering, has become a way to solve talent shortages. Mid-market companies with strong talent pools are likely to be highly attractive targets in 2025.
For mid-market companies, emphasising the strength and expertise of their workforce can enhance appeal to prospective buyers. Talen retention strategies, professional development programmes and an established company culture are key points that should be highlighted in M&A discussions.
Emphasis on Resilience and Risk Mitigation
Recent global events have underscored the importance of resilience in business operations. Buyers in 2025 will focus on companies with robust risk management frameworks, reliable supply chains and adaptable business models. This trend is particularly relevant for mid-market companies, which can attract buyers by demonstrating their preparedness and agility in managing external shocks.
Mid-market companies should assess their operational resilience and be prepared to articulate their risk management strategies to potential buyers. This includes everything from supply chain diversification to cybersecurity protocols, demonstrating a proactive approach to mitigating risks.
Preparing for M&A Success in 2025
For mid-market companies, 2025 promises both opportunities and challenges in the M&A landscape. Businesses prepared to navigate these trends by strengthening digital capabilities, emphasising ESG initiatives and demonstrating resilience will be better positioned to attract quality buyers and secure favourable terms.
An experienced M&A advisor can be instrumental in guiding mid-market companies through this complex environment. Altius Corporate Finance can help identify the right opportunities, structure deals and manage negotiations, enabling sellers to align with buyers whose strategies and goals complement their own. As the M&A landscape continues to evolve, mid-market businesses can capitalise on these trends by staying informed, agile and strategic in their approach to mergers and acquisitions.
