M&A Market Update: Strategic Insights from H1 2025 and Outlook for Year-End
In a year where uncertainty became synonymous with the M&A market, emerging growth companies are navigating an environment of both caution and compelling opportunity. Here, Baird’s Business Owner Solutions team shares strategic insights from H1 2025 and our outlook for year-end.
H1 2025 Recap
The M&A landscape faced headwinds in early 2025 amid global trade uncertainty and an unfavorable financing environment. In H1 2025, global M&A deal volumes declined 13% compared to H1 2024, yet deal values rose by 16%, signaling increased demand for high quality assets.1 In the lower middle market, sectors with limited global trade risk such as services businesses, domestic manufacturing and insurance have garnered the majority of buyer interest this year.
Looking Ahead to H2 2025 & Beyond
While market volatility persists, sentiment across the M&A market is improving, buoyed by easing monetary policy and signs of tariff relief. Buyer appetite remains strong as firms face mounting pressure to deploy capital and generate returns for investors. The pool of sellers continues to grow, driven by retiring baby boomers and delayed processes now moving toward execution.
What We’re Seeing
Baird Business Owner Solutions has experienced a muted version of these trends with a slower start to 2025 followed by high pitch activity in Q2, leading to record backlog as we enter the back half of the year. Qualified buyers continue to favor the lower middle market, especially in today’s high-interest rate environment. Lower middle market transactions typically require less debt to finance, making this end of the market more resilient to macroeconomic pressures than the broader M&A market.
What This Means for You
If you or your client are considering a sale, acquisition or succession planning, now is the time to assess M&A strategy. The lower middle market is attracting premium valuations and well-performing businesses are commanding attention. Let’s connect to explore how you or your client can capitalize on these trends and position for growth in a shifting M&A landscape.
About Baird Business Owner Solutions
Baird’s Business Owner Solutions team advises lower middle-market and emerging growth companies and their owners on business transitions, valuation and M&A transactions.
1Dealogic. H1 2025 M&A deal counts are understated relative to eventual totals due to lags in database processing.