Industry Outlook
November 2025
M&A Momentum on an Upward Trend
A prime environment for sellers ready to leverage preparedness, value clarity, and sector advantage as uncertainty recedes, and the market continues its resurgence.
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Zooming out on M&A
What the World's M&A Bulge Bracket Investment Banks See
As the world’s bulge bracket investment banks – think Goldman Sachs, JPMorgan, and Morgan Stanley – forecast a notable resurgence in global M&A, their optimism is steadily trickling down through every segment of the deal ecosystem. These institutions point to strengthening CEO confidence, improved capital market stability, and the shift toward growth-focused, strategic acquisitions as drivers of renewed M&A activity in 2025 and into 2026. Yet, while the headlines often focus on mega-deals and multibillion-dollar consolidation plays, the most dynamic and resilient activity is now emerging in the lower to mid-market space, $10 million – $500 million in enterprise value, the realm in which Encore AMC Partners operates. For context, $50 million–$500 million in enterprise value deals form the backbone of private market activity in North America, representing founder-led enterprises, family businesses, and companies poised for transformational growth through acquisition or succession.
As bulge bracket banks recalibrate strategies to address new financing models and sector rotation, their perspectives highlight why lower to mid-market M&A has become a hub of dealmaking that is both shielded from volatility and supported by unique structural advantages. This environment is creating increased levels of activity for firms like Encore, driven by private equity dry powder, founder transitions, and increasingly tailored, sector-specialized transaction processes.
Latest Results in Market Activity and Valuation
The first half of 2025 began with moderate headwinds – lower deal volumes and widespread caution, largely due to trade policy uncertainty, financing constraints, and macroeconomic shifts. Still, lower to mid-market M&A is outperforming expectations as the year progresses.
After a sluggish first quarter, transaction volume in the $5M–$100M range was trending 8% above the five-year average, bucking broader market contraction. Qualified buyers increasingly focused on quality assets, operational excellence, and recurring revenue, driving premium valuations for top-tier businesses and so therefore median EBITDA multiples for high-quality lower mid-market assets had been holding at approximately 6.4x, with premium assets attracting 1.5–2.0x higher multiples than non-core deals.
However, in the third quarter and continuing into the fourth quarter of 2025, the most recent trend in lower to mid-market M&A has provided a noticeable revival in deal volume and competitive dynamics, particularly for quality assets, despite persistent macroeconomic and geopolitical headwinds. Private equity activity remains strong, with sponsors aggressively seeking platform acquisitions and add-ons in fragmented sectors, and strategic acquirers are selectively targeting premium businesses that demonstrate resilience and growth potential, as is the case with a current Encore AMC client (see Project Pivot).
Premium valuations persist for top-tier companies as buyers continue to pay above-average multiples for businesses with strong recurring revenue, operational excellence, and sector specialization, even as overall market multiples have compressed. In general, PE and strategic buyers are exercising increased diligence, resulting in competitive processes for high-quality and differentiated companies so the environment is more muted for less differentiated companies – with the hottest sectors being technology services, healthcare, specialty manufacturing, and business services. Adding to the momentum, easing credit conditions and possible interest rate cuts provide tailwinds for further M&A momentum as the year-end approaches.
Lower to Mid-Market is Outperforming Broader M&A Activity
More specifically, lower to mid-market M&A activity in 2025 is at a critical inflection point, which as mentioned has shown remarkable resilience amid shifting economic conditions, even as certain challenges persist. The latest data and our own experience point to an even more robust first half of the following year, with specialized sectors leading the way and a surge of transactional momentum across the landscape.
The trend we see stemmed from the overall global M&A volumes having declined by about 13% in the first half of 2025, while average deal values were rising 16%, underscoring the developing appetite for high-quality transactions and the selectivity in buyer behavior, establishing a harbinger. Certain sectors, such as B2B SaaS and Technology with strong retention, recurring revenue, and sector-specific niches continued to attract 5–8x ARR multiples. Resilient to cyclicality, healthcare sub-sectors, particularly those with specialized or IP-driven models, garnered values at 6.2–8.5x EBITDA for top performers. Buyers also placed heightened emphasis on digitally transformed providers with strong client relationships and proprietary capabilities. At Encore, we’ve had a front row seat to witness how consolidation and reshoring is bolstering demand with automation and Industry 4.0 readiness earning significant valuation premiums. Interestingly, we’ve received calls from buyers expressing increasing levels of interest in the professional services space, especially for those with high client retention and repeat (if not recurring) revenue
The Impact of Stock Market Momentum
The strong performance of the public equity markets in 2025, driven by a 23% rally in the S&P 500 and record cash reserves on corporate balance sheets, has begun to positively influence M&A sentiment and valuations. Rising stock prices serve several effects bridging the valuation gap. Sellers’ and buyers’ expectations are aligning more readily, leading to smoother, faster processes on premium assets. Corporates with strong balance sheets are using their elevated equity value for M&A, especially as financing remains somewhat restrictive for larger, highly leveraged deals. In the context of add-on and roll-up strategies as related to access to capital markets, private equity firms are aggressively pursuing platform consolidation, particularly, again, in SaaS, healthcare, and highly fragmented service niches. Additionally, accelerating tailwinds may be on the way to the extent uncertainty around tariffs and rates gradually eases. If so, dealmakers will likely see a pronounced uptick in volume as macro visibility improves.
Our Perspective
From Encore AMC Partners’ point of view, the deal environment is the busiest since the COVID shutdowns. We have seen several trends which have been propelling this surge:
- Unprecedented buyer backlog. Private equity dry powder, generational ownership transitions, and pent-up seller demand have converged.
- Emphasis on readiness. Due diligence standards are higher than ever, especially around tech infrastructure and customer concentration; well-prepared sellers achieve faster, premium outcomes.
- Selective, targeted processes. Tailored outreach to overlapping strategic and financial buyers is far more effective than broad auctions; personalized, data-driven approaches deliver more qualified interest and stronger closes.
- Accretive acquisition themes. Fragmented industries (business services, software, manufacturing, etc.) are experiencing rapid consolidation as buyers seek scale, technology, and defensibility.
This is not just anecdotal, but evidenced by record levels of inbound interest, pitch activity, and signed engagement agreements across sectors.
Private equity sponsors have raised historic amounts of dry powder, leading to fierce competition for platforms and add-on acquisitions. For example, Encore recently ran an outreach process for a tech-enabled logistics provider and received 78 signed NDAs requesting confidential information memoranda within two weeks, over double the typical engagement rate prior to 2021.
Finally, generational ownership transitions are accelerating as founders look to exit in favorable conditions, such as family-owned specialty manufacturers which are actively preparing for sale, often seeking structured transitions to align new leadership with liquidity events. Further pent-up seller demand is releasing transactional energy; businesses that delayed going to market in 2023 and early 2024 now see a window to achieve premium valuations and rapid closing of transactions.
Summing It Up
As we move into the tail end of 2025 and with our eyes set on 2026, we anticipate sustained competition for quality deals – and, therefore, continued valuation resilience for businesses with growth visibility, and an ongoing pivot to strategic consolidation as companies position for the next economic cycle.
Rather than a “spray and pray” auction model which is losing traction in M&A advisory, Encore, instead, will continue to employ its proprietary market maps and CRM segmentation to identify overlapping financial and strategic buyers, customizing outreach based on sector, deal history, and investment criteria to optimize client outcomes as these processes maximize value.
ABOUT ENCORE AMC PARTNERS
Encore AMC Partners is a premier M&A advisory and management consulting firm headquartered in Newport Beach, California, distinguished by decades of hands-on experience as both executive operators and investment bankers. Our team’s unique blend of operational leadership and technical transaction expertise enables us to deliver strategic guidance that is both empathetic to founders’ objectives and rigorously focused on value creation.
We serve small to mid-market companies across a range of industries, providing tailored M&A advisory, exit strategy planning, and management consulting services designed to maximize shareholder value and support lasting legacies.
Building a No-Strings Relationship with an M&A Advisory Firm
Establishing a relationship with a trusted M&A advisory firm is a strategic asset for any business, regardless of whether an exit strategy is an immediate priority or a long-term consideration. Whether your goals include a near-term sale to a strategic buyer, a private equity recapitalization, a management buyout, or a future generational transfer, having an experienced advisory partner ensures you are prepared to maximize value, navigate complex negotiations, and capitalize on opportunities as they arise. Proactive engagement with an M&A advisor not only positions your company for successful execution when the time is right, but also provides ongoing market insight, valuation benchmarking, and strategic guidance that can enhance growth and shareholder value at every stage of your business journey.
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Othon "O" Herrera
Othon ‘O’ Herrera has established a consistent record of strong returns over multiple business cycles at the C-level, across a range of industries for companies with up to $625 million in revenue, including navigating complex situations such as those requiring performance improvement, M&A, international expansion, turnaround, and transformation. He has led M&A as a private equity backed consolidator leading to value creating exits for investors and shareholders. He founded Encore AMC taking the best investment banking practices from M&A firms he has hired throughout his career. At Encore, Othon chairs the firm’s deal committee, while maintaining a direct presence on all the firm’s deal teams and transactions.
