M&A Environment Shows Promising Growth Prospects for 2025

Welcoming a Positive M&A Atmosphere for 2025

Recent findings reveal a strong surge in optimism regarding mergers and acquisitions, reaching a five-year high according to the latest Citizens’ M&A Outlook. The comprehensive survey conducted among leaders at U.S. middle-market companies and private equity firms has indicated that nearly 54% of decision-makers view the current M&A landscape as robust.

Factors Contributing to the Optimistic Outlook

The research underscores several factors propelling this optimistic outlook, chiefly economic recovery and reduced inflation. A significant 57% of survey participants anticipate improvements in the U.S. economy over the coming year, marking an increase from 47% in previous assessments. Additionally, an impressive 59% of middle-market entities believe that these positive economic indicators will streamline business activities.

Such a favorable atmosphere is further bolstered by heightened expectations surrounding valuations, particularly noted among private equity firms and larger middle-market players. Almost 90% of all respondents predict these valuations to either stabilize or rise in the next year.

Private Equity Firms Leading the Charge

Private equity firms have shown strong confidence in the current M&A climate; 68% perceive the landscape as favorable, a substantial rise from 52% last year. Moreover, 64% anticipate an increase in deal flow for 2025, notably as more private equity-backed assets are poised to enter the market.

The sentiment among buyers and sellers appears to be balanced, which fosters a healthy environment for negotiations. Remarkably, the pool of potential sellers has widened significantly; 73% of middle-market businesses are already identifying as prospective sellers, a noticeable rise from 63% reported the previous year.

The Eager Buyers

Private equity firms are gearing up for increased activity, with 90% of those anticipating higher deal flow next year expecting to pursue more acquisitions than in 2024. This combination of motivated sellers in the middle market alongside enthusiastic private equity acquirers is likely to create a thriving ecosystem for M&A opportunities.

Insights from the 2025 Survey

Some critical insights have emerged from the 2025 survey emphasizing the ongoing evolution within the M&A sector:

• New Interest in Partial Sales: A growing number of middle-market companies are showing a preference for partial sales or divestments of business units over complete exits, broadening the seller pool for 2025.
• AI’s Role in Dealmaking: Emerging trends highlight artificial intelligence as a potential factor in stimulating M&A activity. The survey found that among private equity firms expecting increased deal flow, 38% cited the aspiration to integrate AI capabilities into their portfolios as a primary motivator.
• Global Deal Interests: A significant 52% of sellers and 46% of buyers in the middle market are open to exploring international opportunities. Even more telling, 74% of private equity firms express a greater willingness to invest outside the U.S. this year.

About Citizens Financial Group

Citizens Financial Group, Inc., one of the oldest and largest financial institutions in the country, boasts assets totaling approximately $219.7 billion. Headquartered in Providence, Rhode Island, Citizens provides a comprehensive array of retail and commercial banking services tailored for individuals, small businesses, and large organizations. By prioritizing customer relationships and understanding their unique needs, Citizens delivers personalized advice and solutions.

With a commitment to supporting middle-market enterprises, Citizens combines deep sector knowledge with a client-centric strategy to help them realize their full potential. The M&A Advisory team at Citizens comprises over 100 professionals across various industries, ensuring clients receive specialized guidance throughout the M&A process.

Frequently Asked Questions

What is the main finding from the 2025 M&A Outlook?

The main finding is that optimism regarding the M&A environment is currently at a five-year high, with over half of decision-makers expressing confidence in the market.

Which factors are driving this optimism in the M&A landscape?

Key factors include projected economic growth, improving valuations, and a notable increase in the number of potential sellers in the market.

How do private equity firms view the current M&A environment?

Private equity firms have shown significant positivity, with many believing the environment to be strong and anticipating an increase in deal flow for 2025.

Are companies considering international deals as part of their M&A strategy?

Yes, there is a growing interest among middle-market companies and private equity firms in pursuing international deal opportunities.

What role is artificial intelligence playing in the current M&A trends?

Artificial intelligence is seen as a key driver for future deals, with firms looking to integrate AI capabilities into their portfolios as they plan for 2025.

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