The M&A Pulse Check captures sentiment across the North American mid-market. The 2025 edition reflects a market that remains subdued – defined by cautious decision-making, building pressure to generate returns and deploy capital and a renewed focus on fundamentals.
Market sentiment: realism sets in
The outlook for the investment environment has cooled noticeably. Just 39% of respondents feel positively about conditions – down from 79% in 2024, and well below the 82% recorded in 2021.
At the same time, 48% now describe their outlook as neutral, the highest level since our Pulse Check began, while 13% view the environment as somewhat or very negative. This shift points to a more cautious, grounded market mindset: dealmakers are no longer anticipating a near-term rebound, but nor are they expecting a sharp deterioration. Instead, sentiment has reset. Many are taking a wait-and-see approach, focusing on readiness rather than trying to predict or time a turning point.
“After several years of optimism for a sharp rebound, what we are seeing now is a more measured perspective on the investment environment.”
Axel Leichum, Partner at CIL.
Current deal activity remains at a low point
Respondents continue to report subdued activity. Nearly 70% described M&A activity over the past 3–6 months as either “low” or “very low” – a slight increase from 2024 and the highest figure since we began tracking.
Respondents continue to report subdued activity. Nearly 70% described M&A activity over the past 3–6 months as either “low” or “very low” – a slight increase from 2024 and the highest figure since we began tracking.
Only 6% viewed deal activity as “high” or “very high,” compared to 16% in 2024, reflecting a material slowdown in process launches and completions. The proportion rating activity as “about average” has also dropped, suggesting that even baseline market confidence has eroded.
This mirrors wider market trends. S&P Global reports that M&A volumes remain below historical norms, with dealmakers citing execution risk, valuation mismatches, and policy and regulatory uncertainty as key reasons for delay. Although activity has begun to stabilize, most transactions are taking longer to complete, and new process launches remain limited across much of the mid-market.
Only 6% viewed deal activity as “high” or “very high,” compared to 16% in 2024, reflecting a material slowdown in process launches and completions. The proportion rating activity as “about average” has also dropped, suggesting that even baseline market confidence has eroded.
This mirrors wider market trends. S&P Global reports that M&A volumes remain below historical norms, with dealmakers citing execution risk, valuation mismatches, and policy and regulatory uncertainty as key reasons for delay. Although activity has begun to stabilize, most transactions are taking longer to complete, and new process launches remain limited across much of the mid-market.
“The level of caution we’re seeing is higher than in previous cycles. Deals are still happening, but they’re slower, more selective, and often taking longer to get over the line.”
Rebecca Pigula, Partner
Pressure to deploy capital may finally force a turn
Despite subdued current conditions, expectations for an uptick in M&A activity remains although at lower confidence levels than in previous years as previously expected rebounds have not materialized.
71% of respondents expect M&A volumes to increase over the next 12 months. The most frequently cited triggers for this uptick are pragmatic rather than bullish:
- Need to deploy capital (37%)
- Improved business performance (24%)
- Macroeconomic certainty (20%)
With hold periods stretching and exits delayed, some investors are preparing to bring assets to market out of necessity, even if pricing falls short of previous expectations.
Q3 2025 is the most commonly cited point for renewed activity. However, the timeline will depend heavily on external factors, including clarity around tariffs, fiscal policy, and sector-specific regulation.
Selectivity intensifies
The perceived quality of assets continues to deteriorate. In 2025, only 13% of respondents rated available assets as “excellent”, “very good” or “good” – down from 21% in 2024 and 43% in 2023. At the other end of the scale, 24% described assets as “poor” or “very poor” – the highest level recorded since the Pulse Check began.
This decline reflects a combination of underperformance and limited market readiness. Many businesses that might otherwise be marketed are either not yet fit for sale or are failing to meet buyer expectations.
Despite this, premium assets continue to perform well. In recent processes, well-positioned and well-performing businesses have attracted high levels of interest and secured strong valuations, particularly in more resilient sectors such as services and infrastructure. However, buyers remain highly selective. Average businesses are struggling to transact and are often delayed, withdrawn, or repriced.
The result is a polarized environment:
- At the top end, quality assets are heavily contested and continue to command robust multiples.
- In the middle, buyer caution remains high, and deal execution is increasingly difficult.
Indeed, according to PitchBook’s Q1 2025 US PE Breakdown, North American private equity exit activity fell 18% year-on-year, with exits under $250m declining more sharply than larger-cap deals. The report also noted that processes skewed towards higher-quality, better-performing assets, while mid-market deals continued to stall due to valuation gaps and execution risk.
Political changes have added complexity
Survey responses show a mixed view on the impact of the new US administration on the M&A market. While 47% expect a positive effect on the M&A market over the next four years, 46% anticipate a negative impact, and the remainder foresee little or no change.
Although the survey was completed before the latest tariff announcements, political and regulatory uncertainty was already emerging as a concern. This backdrop is contributing to more cautious decision-making, particularly in cross-border deals and in sectors subject to regulatory oversight.
While short-term disruption is expected, many believe that greater regulatory clarity and macroeconomic stability could unlock activity heading into 2026.
Strategy shifts
As market dynamics remain challenging, investors are focusing more heavily on operational levers for value creation. While buy & build remains the most commonly cited strategy, operational improvements and commercial effectiveness have both seen notable increases this year.
This reflects the profile of assets currently in market. Many businesses, particularly in services and healthcare, grew quickly post-COVID but underinvested in commercial infrastructure. There is now increased emphasis on improving sales, pricing, and internal efficiency to drive value.
The number of respondents citing commercial effectiveness as a priority has steadily increased over the past four years – an indication of shifting focus in a slower market.
Pockets of activity are emerging
While overall M&A activity remains muted, certain sub-sectors are showing more consistent signs of movement. Investors remain selective, but where fundamentals are strong and performance has stabilised, quality assets will continue to come to market and attract meaningful interest.
At CIL, we’re seeing signs of continued activity in several areas where fundamentals remain strong and investor interest is returning, such as:
- Critical infrastructure – including water and wastewater, power generation and distribution, telecom networks and data centers. These sectors benefit from regulatory tailwinds, high barriers to entry and long-term demand visibility.
- Pharma and life sciences – as pharma revenues have started to recover from the post-COVID-19 slump, this has buoyed the wider eco-system, particularly in services and technology that maximize commercial success and support R&D speed and efficiency. Albeit, President Trump’s Executive Order “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients” and HHS funding cuts are causing uncertainty.
- Non-discretionary services – such as testing, inspection & certification (TICC) and operations & maintenance (O&M), where demand tends to be resilient and is increasing due to ageing infrastructure and the continued trend towards greater outsourcing.
- AI-enabled vertical SaaS – sector-specific software platforms in areas like legal, insurance, logistics and construction that embed AI to automate workflows, enhance decision-making and deliver predictive insights. Monetizable data assets and strong enterprise stickiness underpin long-term value, though adoption rates vary by sector maturity.
Activity in these areas remains focused on high-quality assets, with processes continuing to be highly selective. That said, we expect them to account for a meaningful share of mid-market deal flow in the second half of 2025.
Final reflections
While deal professionals remain active and capital is available, execution risk and uncertainty continue to delay progress. Recovery is still expected, but the mood has shifted. There is less interest in trying to time the rebound. Instead, the focus is on readiness: being prepared when the right opportunities arise, and having the operational toolkit to unlock value when they do.
If you would like to discuss any findings from the survey, please do get in touch.
*Our survey is built on an annual average of ~75 responses from across private equity, investment banks, and corporates.
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