By Lou Sokolovskiy
These days, few in the mergers and acquisitions (M&A) industry are unfamiliar with this scene: a deal, which has been years in the making, is languishing. It feels stuck—marooned, as Bobby Blumenfeld of Generational Equity put it, “somewhere in purgatory.”
But fortunately, this ambient gloom is not indefinite, and transactions don’t stay in purgatory forever. Somehow, they often reach completion.
“We recently closed a deal representing the Seller in the transportation space”, Mike Uehlein of Summit Advisory said in a recent member-only virtual roundtable at Opus Connect, adding that while his company is industry agnostic, recent interest has been focused on manufacturing and transportation.
The deal, he explained, had been tabled by Summit two years ago based on non-historical performance, a casualty of market turbulence in the transportation industry.
What changed?
A number of strategic improvements helped position their client for a meaningful recovery, and ultimately they found a new strategic Buyer who recognized not only the present value, but more importantly, how this addition would positively impact their business “five to 10 years in from now.”
This anecdote encapsulates a prevailing dynamic: buyers are returning, selectively and strategically, to sectors that exhibit resilience, notably manufacturing, logistics, and defense. While the broader market remains sluggish—April 2025 saw a 24.8% year-on-year drop in US deal volume for transactions above $100 million, according to an EY report published last week—certain industries defy the trend. Technology alone accounted for 165 deals valued at $236 billion, with megadeals representing 56% of billion-dollar-plus transactions by value.
The overall picture is one of bifurcation. For some, “everyone is generally sitting on their hands at the moment,” as one advisor put it. But others, like Mark Carroll of Angle Advisors and Jeremy Mau of Lincoln International, are actively engaged in multiple live deals, betting on execution while the market discounts.
A Market That Demands Perfection
Underlying the paralysis is a tightening of capital. Banks have grown reticent, and the bar for approval has risen markedly.
“If I’m seeing one phenomenon,” said George Walden, managing director at Principal, “it’s harder to get something through a bank, but private equity has stuck its head up and is involved now.”
This shift is not surprising given how much private credit and non-bank financing are surging and how borrowers have been turning to alternative, risk-tolerant financing sources. Private credit markets now manage some $1.7 trillion in assets, according to PwC’s 2025 Outlook report that came out in late January, with major players such as BlackRock and Brookfield deploying billions in leveraged acquisitions. In parallel, the study added, high-yield bond issuance rose 74% in 2024 to $388 billion, while leveraged loan issuances more than doubled to $770 billion.
But even with liquidity, buyers have grown choosier.
“I think people are looking for a deal that’s perfect,” said Judd Appel of Mowery & Schoenfeld in Chicago. “If you’ve got an issue with… a management team, customer concentration, anything like that? No, no, no.”
Retail assets, in particular, are treated with deep suspicion. “We just went through a process with the deal,” Appel continued, citing issues ranging from leadership concerns to industry stigma, “and can’t find anyone to buy it.”
Heidar Fadae of Balmoral Advisors, another Chicago-based investment bank, echoed the sentiment. Sponsors are struggling to unearth premium assets, with many concluding “they weren’t seeing A-quality assets come to market.” That scarcity drives a cautious, sometimes paralyzed, buyer class—one for whom waiting six months may seem more valuable than acting today.
Capital Finds a Way
Still, deals get done. Flexibility in financing has proven decisive, especially in the lower-middle market. “What I’m excited about is seeing the financial flexibility in private credit markets come down market more,” said Mitch Vermet of Bankers Edge Advisory in Michigan.
Lenders that once required $10 million in EBITDA are now underwriting deals at $5 million or less, a shift that empowers independent sponsors, he added.
“We’ve been very active,” said Marilyn Adler of New York-based Mizzen Capital, “and we just find the lower middle market is just not… impacted as much.” That segment—often family-owned firms grappling with succession—offers steady deal flow.
But another participant questioned whether such assets still exist at scale, noting that “expectations from sellers were through the roof.”
The structural dynamic has also shifted. As Jordan Buxton– Punch of GenNx360 Capital Partners put it, “I’m not so sure the uncertainty creates more of a buyer or sellers’ market – in fact I might say it’s a structurer’s market.” Pricing may matter less than execution: speed to close, certainty, and diligence mitigation have become the new currency of competitive advantage. Larger buyers are increasingly offering all-cash deals, writing the same equity checks but pursuing smaller, lower-risk companies.
Where the Action Is
Certain verticals remain reliably active. “So, anything in IT, technology… is demanding a lot of attention,” said Blumenfeld. He also cited HVAC, and electrical services roll-ups as especially attractive to private equity firms with clear operational theses. Ryan Keats of SF&P Advisors confirmed the trend, noting he had closed 15 deals, with 6 more under LOI, this year across HVAC, plumbing, electrical, and roofing.
The defense sector is similarly robust, buoyed by rising government budgets and geopolitical tailwinds. The PwC report said that this category is one of the few with structural funding visibility for the next decade, creating M&A incentives despite broader uncertainty.
Meanwhile, technology, despite antitrust scrutiny, is seeing a resurgence in megadeals. The $500 billion joint venture between OpenAI, Oracle, and SoftBank in January 2025 exemplifies how strategic imperatives can override regulatory hesitations. With up to $2 trillion in global data center investment projected over the next five years, the line between organic growth and acquisition is increasingly blurred.
Looking Forward
The outlook, remarkably, is not uniformly grim. A Deloitte survey from February found that 87% of corporate and PE respondents expect deal volume to rise in the coming year, with 75% predicting larger average deal sizes. The optimism is driven by macroeconomic tailwinds and strategic repositioning. Over 80% of dealmakers reported changing their M&A strategy—often narrowing sector focus or shifting geographically, including notable pivots between domestic and cross-border activity.
Technology is also reshaping how deals are executed. Generative AI is now used by 97% of dealmakers surveyed, influencing everything from target identification to due diligence. Process automation, alongside capital flexibility, is reshaping the very mechanics of M&A.
While the path to a deal may be less linear than in years past, it is no less achievable. Success now requires more creativity in capital structure, nimbleness in execution, and clarity of long-term vision. As Uehlein’s deal illustrates, those willing to act strategically and with flexible terms, can still extract considerable value in a market that many view as frozen.
In purgatory or not, the M&A world continues to turn. Deals are not dead. They are simply harder won.
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June 2025
