PROVIDENCE – Optimism about the deal-making environment has reached a five-year high, according to a new survey from Citizens Financial Group Inc. published Wednesday.
The Citizens 2025 Mergers and Acquisition Outlook, which surveyed 400 leaders at U.S. middle-market companies and private equity firms, revealed that 54% of decision-makers believe the current M&A environment is strong.
The survey was conducted among U.S.-based middle-market businesses ranging from $25 million to $1 billion in revenue, as well as private equity firms with a fund size less than $1.5 billion that are active in the acquisition and sale of U.S.-based companies with revenue between $50 million and $1 billion.
Core business sectors included Citizens’ industry specialties of aerospace, defense and government services, business services, consumer, real estate, gaming, lodging and leisure, health care, industrials, technology, media and telecommunications, transportation and logistics, and financial services, among other industries.
Economic growth and easing inflation were among the most-cited factors fueling middle-market businesses’ M&A plans in 2025, the survey found. Fifty-seven percent of all respondents expect the U.S. economy to improve in the year ahead, up from 47% last year, and 59% of middle-market companies believe that the economic growth backdrop will make business easier. Ninety percent of respondents expect valuations to be stable or higher in 2025.
“The prevailing headwinds of recent years have really moderated,” said Jason Wallace, head of Citizens M&A Advisory. “We see companies and sponsors coming into 2025 with big plans and this year’s survey shows how focused they are on the growth environment.”
Citizens Rhode Island President Keith Kelly said the outlook for the economy and deal-making in Rhode Island has the same sentiment.
“The 2025 Citizens M&A Outlook shows that business leaders across the country are entering the new year with renewed optimism about the outlook for the economy and deal-making,” Kelly said. “M&A hinges on sentiment and when I speak to our clients here in Rhode Island, it is clear that sentiment is improving. Over the last several years, Citizens has added significant capabilities to support clients who are interested in pursuing M&A. We look forward to helping our customers navigate this dynamic environment as momentum accelerates.”
Private equity firms are especially bullish in 2025, according to the survey. Sixty-eight percent believe the current M&A environment is strong, an increase from 52% last year. In addition, 64% expect deal flow to increase in 2025, particularly as more private equity-backed assets come to market.
The seller pool has expanded significantly, the survey found, with 73% of middle-market companies identifying as potential sellers in the year ahead, an increase from 63% last year.
Other key findings from the survey include growing openness to partial sales; artificial intelligence could drive deal-making; and interest in international deals persists, with 74% of private equity firms significantly more likely to consider investment opportunities outside the U.S. in 2025, up from 54% last year.