Who’s Buying? The Rise in M&A Buyer Activity
As we move into 2025, mergers and acquisitions (M&A) activity continues to accelerate, fueled by strong buyer confidence, lower interest rates, and increased deal competition. The Q4 2024 Market Pulse Survey by the International Business Brokers Association (IBBA) and M&A Source highlights a surge in NDAs (Non-Disclosure Agreements) and LOIs (Letters of Intent) per deal, signaling greater buyer interest across multiple sectors.
In this blog, we’ll analyze
who is buying businesses in 2025, breaking down buyer demographics, competition levels, and the growing influence of
private equity firms and strategic buyers in the market.
More Buyers, More Offers: The 2024 Surge in M&A Activity
According to the latest Market Pulse data, buyer competition intensified throughout 2024, leading to an increase in:
✅ NDAs Per Listing: More buyers are requesting confidential details, showing a stronger appetite for acquisitions.
✅ LOIs Per Deal: The number of serious offers per listing has risen significantly, particularly for businesses in high-demand industries like healthcare, business services, and technology.
✅ Deal Closing Speed: With more competition, deals are moving faster, as buyers look to secure assets before valuations increase further.
Who’s Buying? Buyer Demographics in Main Street vs. LMM
The type of buyers varies significantly between Main Street businesses ($500K-$5M revenue) and the Lower Middle Market (LMM) ($5M-$50M revenue):
✅ Main Street Buyers:
- Individual Buyers & First-Time Entrepreneurs: Make up the majority, often looking for owner-operated businesses.
- Serial Entrepreneurs: Experienced buyers who scale, grow, and resell businesses.
- Small Investment Groups: More investors are pooling resources to acquire profitable businesses.
✅ Lower Middle Market (LMM) Buyers:
- Strategic Buyers: Companies acquiring competitors or complementary businesses to expand market share.
- Private Equity Firms: More PE funds are moving downstream to acquire LMM companies at attractive multiples.
- Family Offices & Institutional Investors: Investing in LMM businesses as long-term growth assets.
The Role of Strategic Buyers vs. Private Equity Firms
One of the most notable shifts in 2025 is the rising influence of private equity (PE) firms and strategic buyers:
✔️ Strategic Buyers:
- Looking for synergies to integrate new acquisitions into existing operations.
- Often pay higher multiples for businesses that fit long-term strategic goals.
- Most active in technology, healthcare, and logistics sectors.
✔️ Private Equity Firms:
- Acquiring LMM businesses at 4.5x – 7x EBITDA multiples, slightly above average valuation benchmarks.
- Focus on profitability, scalability, and strong management teams.
- Increasing presence in business services, niche manufacturing, and B2B technology.
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Key Takeaway: If you own a business with
recurring revenue, strong margins, and growth potential, your chances of attracting
higher-value offers from PE firms and strategic buyers are greater than ever.
What This Means for Business Owners in 2025
If you're considering selling your business, the current market presents strong opportunities:
✔️ Increased Buyer Competition: More buyers mean better deal terms and higher valuations.
✔️ Stronger Private Equity Interest: PE firms are actively seeking high-margin, scalable businesses.
✔️ Faster Deal Timelines: The rise in LOIs per deal means serious buyers are moving quickly to secure deals.
Now is the time to assess your business’s market position and prepare for a potential sale.
Contact First Choice Business Brokers SF Bay today for a
confidential consultation on how to
position your business for the best possible deal.
Next in the Series: M&A Financing Trends in 2025
In our next blog, we’ll explore
how deal structures are evolving, with
more cash at close and fewer earnouts shaping the future of business sales. Stay tuned! 🚀
