Starting Strong: Q1 2025 M&A Deal Closings

Shifting policies under the new presidential administration and economic uncertainty have led to a more cautious M&A market in the first quarter of the year. Private equity activity has slowed amid changing regulatory signals and market volatility, leading many to take a wait-and-see approach. However, the lower middle-market remains resilient, with lower interest rates, strong private equity capital, and ongoing generational transitions driving deal flow.

Amid these shifting conditions, KSM’s transaction advisory team has seen strong deal momentum, with over 20 closed deals in Q1 and enterprise values ranging from $1.5 million to $75 million. Here is a closer look at some of our M&A activity by sector.

Industrials

Building on the momentum of a strong 2024, with over 65 closed deals in the industrials sector, the KSM team continued to see strong deal volume in the space. Select Q1 industrials deals are highlighted below:

• Midwest-based material handling, packaging, and robotics company with percentage-of-completion accounting
• Commercial electrical contractor with percentage-of-completion accounting based in the Southeast
• Southwest-based telecommunications contractor offering aerial, underground, and micro-trenching services
• Electrical parts distributor based in the Southeast
• Interior and exterior building supplies manufacturer based in the Southeast
• Hardwood building materials manufacturer based in the Midwest
• Stainless steel door manufacturer based in the Southeast

Services

Whether it is a business-to-business or business-to-consumer deal, KSM brings a breadth of experience in the services sectors. After a slow start to the year, KSM saw increased deal activity in the second half of the quarter. Q1 transactions are highlighted below:

• Electric generator distributor and installer based in the Southeast
• Overhead door manufacturer and installation company based in the Southeast
• Overhead door manufacturer and installation company based in the Mid-Atlantic

Technology

Building off a strong 2024, the technology sector remains a hotbed of activity in Q1, with seven strategic deals closed in the first quarter, including the deals highlighted below:

• Computer-aided design/computer-aided manufacturing software reseller located in the Pacific Northwest
• Three computer-aided design/computer-aided manufacturing software resellers located in the Southeast
• Two computer-aided design/computer-aided manufacturing software resellers located in the Midwest
• Computer-aided design/computer-aided manufacturing software reseller located in the Mid-Atlantic

Consumer

Though consumer deals have been slower to close due to uncertainty surrounding tariffs, KSM has several active deals in the space and multiple consumer deals in the pipeline.

• Beauty and skin care company located in the Southeast
• Consumer packaging company located in the Midwest
• Novelty gifts company located in the Northeast

Transportation and Logistics

Following a slow 2024 in the transportation and logistics sector, KSM saw a nominal increase in activity in Q1, with one closed deal and several active projects. Based on pipeline activity, KSM is expecting a rebound in this sector in 2025.

• Cold chain transportation company located in the Southeast

A Strong Start to 2025

Despite broader uncertainty, lower middle-market M&A remained a bright spot in Q1, driven by strong private equity capital, favorable interest rates, and ongoing generational transitions. KSM’s transaction advisory team has seen steady deal flow, continuing last year’s momentum. With ongoing sell-side activity, deal volume is poised to rise, and we expect that strength to carry through the end of the year.

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