Why 2025 Is the Year to Plan Your Business Exit Strategy

For privately held business owners, 2025 offers a unique convergence of factors that make it an ideal time to plan your exit strategy. From stabilizing macroeconomic conditions to evolving market opportunities and the likelihood of significant growth in the middle market, this year is poised to be an opportune time for those considering a sale or transition.

Recent insights from leading experts, including the Firmex Forecast: Middle Market Deal Trends Q4 2024 and the Market That Moves America podcast, reveal a unique convergence of economic, market, and industry conditions that make this a perfect time to begin mapping out your exit strategy this year.

A New Era of M&A: The “New Normal”

The middle market is entering what advisors are calling the “new normal.” After a few years of depressed deal activity due to high borrowing costs and economic uncertainty, conditions are improving. According to the Firmex report, North American merger and acquisition (M&A) volume for 2024 increased by 9% compared to the previous year, signaling renewed activity.

“Volume will increase as the economy stabilizes, interest rates fall, and companies restructure,” noted Nadja Langlez, Associate at Walter Fries Corporate Finance in Germany.

This optimism is supported by a stabilizing political landscape, and pent-up demand from private equity firms and corporations. While the frenzied dealmaking of 2021 is unlikely to return, the steady rebound positions 2025 as a buyer-friendly market with increased opportunities for sellers.

Improving Valuations and Buyer Activity

Valuations for private middle-market companies, which have been subdued in recent years, are showing signs of improvement. The Firmex Forecast predicts that 17% of advisors expect above-average valuations in 2025, compared to only 11% in 2024. Private equity firms, flush with capital, are becoming more active, particularly for high-quality assets.

"The private equity players are being very selective, but they will pay high prices when they find a quality company,” said a Managing Director from Europa Island.

Additionally, the balance between buyers and sellers is normalizing. In 2024, there was an oversupply of businesses on the market, but this imbalance is expected to even out in 2025, making it easier for well-prepared sellers to find competitive bids.

Middle Market Confidence and Growth

The Market That Moves America podcast revealed record confidence levels among middle-market businesses, with 84% expressing optimism about the U.S. economy—the highest in six years. This confidence translates into higher growth projections:

• Revenue Growth: Projected at 8.9% for 2025, up nearly a point from 2024.
• Employment Growth: Expected to rise by 9.5%, with businesses actively expanding their workforce.

According to Doug Farron, Managing Director of the National Center for the Middle Market, “Middle market businesses are resilient and vital to the economy. These projections show that 2025 is shaping up to be a very good year for growth.”

Technology and Innovation as Drivers

Technological advancements continue to play a transformative role in the middle market. Investments in artificial intelligence (AI), automation, and customer relationship management (CRM) tools are creating opportunities for efficiency and scalability.

• AI and Automation: Enable companies to reduce costs and streamline operations, making them more attractive to buyers.
• Expansion into New Markets: Nearly 60% of middle-market businesses plan to introduce new products or services, creating new revenue streams and positioning themselves as leaders in their industries.

Challenges Remain but Are Manageable

While the M&A landscape is improving, challenges persist:

• Prolonged Due Diligence: Advisors report that buyers are taking longer to evaluate deals and conducting more rigorous due diligence.
• Conservative Lending: Financing remains a hurdle, but declining interest rates are easing this burden.
• Talent Shortages: Businesses that invest in training and retain skilled employees will have a competitive edge.

Despite these obstacles, even incremental improvements in deal-closing rates and valuations signal a favorable environment for sellers.

The Time to Act Is Now

The convergence of falling interest rates, improving valuations, and increasing buyer activity creates an opportunity for privately held business owners. Advisors are optimistic about deal making picking up in the second half of 2025, driven by stabilized economic conditions and pent-up demand.

“We’re seeing deals pick up because a larger number of buyers and sellers are in the market at the right price,” said Pierre Moreault, President of Moreault Conseillers in the U.S.

Position Your Business for a Successful Exit in 2025

The best time to prepare for your exit is when your business is growing. Buyers want to know that your business has future potential. And you need to be prepared in case they approach you out-of-the-blue. You should know the value of your business at all times.

2025 presents a rare combination of opportunities for business owners ready to plan their exit strategy. By acting now—making operational improvements, strategic investments, or seeking key new hires—you can position your business to maximize its value and ensure a seamless transition when the time is right.

While external factors may influence business value and timing, focusing on what you can control is essential. Begin by educating yourself on the steps necessary to preserve continuity, enhance value, and achieve your goals. Preparing your business for sale can take months or even years, so don’t wait until a buyer comes knocking—be ready to enter the market when the time is right.

To get started, download a free copy of our new book, Sell Your Business at the Right Time, for the Right Price, and to the Right Buyer. This resource is designed to help you navigate the complexities of selling or transitioning out of your business in 2025. Take charge of your future today!

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