Q3 2025 Quarterly Market Update
True North Market Commentary
M&A markets through Q3 2025 show a significant dichotomy between large transactions (public companies and deal values in excess of $250 million) and the lower middle market (less than $250 million of market value).
The market for large transactions moved into the back half of 2025 with greater confidence. Global and US private equity deal activity picked up in the third quarter, supported by better financing conditions, more stable interest rate expectations, and a renewed risk appetite among both sponsors and strategic acquirers. However, lower middle market volume remains selective, with buyers prioritizing scale, strong credit profiles, lack of tariff exposure, and clear, defensible growth narratives.
Without regard to size, well prepared companies in resilient sectors such as business services, healthcare, specialty distribution, and packaging continue to draw strong interest and solid valuations, while more cyclical businesses and those with tariff exposure face a more discerning buyer universe.
Q3 2025 Market Update - Across All Size Deals
M&A Activity Accelerates, Led by North America and PE In Q3 2025, North American M&A value increased sharply, supported by a resurgence of megadeals in B2B, materials, and energy. B2B alone represented more than one quarter of North American deal count and 29% of deal value, with megadeals contributing nearly $160 billion of B2B volume in the quarter, roughly three times the level recorded in Q2. US private equity sponsors were central to this momentum. By the end of Q3, sponsors had completed approximately 6,900 US deals YTD, totaling about $869 billion of aggregate value. The quarter itself accounted for 2,347 deals and $331.1 billion of value, up 3.7% and 27.8%, respectively, versus Q2, and 11.7% and 38.3% versus the same period last year. Q3 was the strongest quarter for US PE deal value since late 2021.
Key Highlights
U.S. Deal Activity Remains Consistent After a sharp drop in Q2 2020, dollar volume and transaction counts climbed rapidly, peaking in late 2021 and early 2022 at roughly $350 billion of value and more than 3,000 deals per quarter. Activity then cooled through 2022 and 2023 as aggregate deal value settled in the $200 to $250 billion range and counts trended steadily lower. Conditions stabilized in 2024, followed by a clear rebound of aggregate deal value in 2025, with Q3 2025 delivering the highest deal value since the 2021 peak, even as deal counts remain well below prior highs. The delta between rising dollar volume and more muted deal counts suggests that the current upswing is being driven by larger transactions rather than a broad-based surge in middle market deal flow.
Valuation Metrics
U.S. Private Equity Reported Transactions ($10-500 Million)
GF Data tracks the U.S. private equity market in reported transactions between $10 - $500 million of enterprise value. Middle market deal activity softened again in the third quarter, in line with the seasonal slowdown that often occurs over the summer and continued concerns about tariff exposure. Contributing sponsors reported 66 completed deals, about 20% below the 83 closings in the second quarter. YTD, 211 transactions have been reported, roughly 27% fewer than in the first nine months of 2024. This pullback reflects both the customary mid-year lull in closings and ongoing caution among buyers facing higher financing costs and mixed asset quality. (See Deals/Year below)
As the bar chart above reflects, average purchase price multiples recovered through Q32025, rising to 7.5x TTM adjusted EBITDA from 7.1x in 2024. The rebound was led by renewed activity in leveraged recapitalizations and growth deals, which were weighted toward larger, better capitalized companies that can support higher leverage.
As can be seen from the chart below, most of the valuation improvement occurred in the $50 - $250 million TEV bands, where scale and financing access remain clear advantages in today’s credit markets. Smaller transactions continued to encounter pressure from cautious lenders and higher borrowing costs, while pricing at the upper end of the middle market was largely stable following volatility in late 2024.
Valuations in the manufacturing sector improved in the third quarter, lifting the YTD average multiple to 6.7x, though still below the 7.0x level recorded in 2024. The gain was driven mainly by an increase in unbranded consumer manufacturing valuations in Q3 , which offset softer pricing in branded consumer and business to business categories.
.png?width=850&height=445&name=Q3%202025%20GF%20Data%20TEV-EBITDA%20Manufacturing%20($10M-$250M%20TEV).png)
Valuations in the distribution sector continued to firm in the third quarter, lifting the YTD average multiple to 7.2x compared with 6.9x in 2024 and roughly back in line with the 2022 and 2023 averages. The improvement has been most pronounced at the upper end of the middle market, where multiples for $100 - $250 million TEV platforms expanded to roughly 10.4x EBITDA, while smaller deals in the $10 to $25 million band also ticked up as sponsors and strategics pursued add on capacity in core channels.
.png?width=850&height=439&name=Q3%202025%20GF%20Data%20TEV-EBITDA%20Distribution%20($10M-$250M%20TEV).png)
Business services multiples strengthened as well, with the YTD average rising to 7.5x from 7.2x in 2024 and surpassing the prior cycle high set in 2022. The gains are anchored by robust pricing for larger platforms, where $100 - $250 million TEV businesses continue to command around 11.0x EBITDA and $50 - $100 million TEV assets are trading in the high eight times range, both well above long-term norms.
.png?width=850&height=451&name=Q3%202025%20GF%20Data%20TEV-EBITDA%20Business%20Services%20($10M-$250M%20TEV).png)
September 12, 2025
THE PRINCIPALS OF TRUE NORTH ADVISE SESCO IN SALE
SESCO sold its business to LFM Capital with CP Energy Holdings participating as a minority investor. SESCO manufactures oil conditioning equipment intended to service the rapidly growing electrical grid.
The Principals of True North advised SESCO in this transaction and acted in their capacity as registered investment banking agents of Burch & Company, Inc., member FINRA/SIPC. Burch and True North are not affiliated entities.
Source: True North Strategic Advisors
November 6, 2025
SENSORTEC ACQUIRED BY JUNTO HOLDINGS
MINNEAPOLIS--(BUSINESS WIRE)--Junto Holdings Group, Inc. (“Junto”), a Minneapolis-based permanent-capital investment holding company, today announced the acquisition of SensorTec, LLC (“SensorTec”), a Fort Wayne, Indiana-based manufacturer of precision temperature sensors used in critical test, measurement, and control applications across food and beverage, process controls and automation, and other mission-critical markets.
The acquisition marks Junto’s first platform investment, establishing a foundation for future growth in the test and measurement sector and other niche product markets.
Source: Business Wire
November 7, 2025
JACK LAURIE GROUP (JLCS DIVISION) ACQUIRED BY CLEAN TEAM
Clean Team, Inc. announced the acquisition of JLCS, a division of the Jack Laurie Group, a janitorial service provider headquartered in Indianapolis. The strategic purchase marks a milestone in Clean Team’s ongoing expansion efforts, as the Jack Laurie Group has a workforce of over 125 employees and a strong geographic footprint across Northeast Indiana.
JLCS brings a wealth of experience and expertise to Clean Team’s growing portfolio. The JLCS dedicated special projects team, which specializes in hard floor care and carpet cleaning, will enable Clean Team to provide even more efficient and high-quality floor care solutions to its existing customers.
Source: CleanLink