Q4 2024 Middle Market M&A Industry Update

This document is a report detailing the trends and activities in the middle-market M&A sector for the fourth quarter of 2024. It outlines several key factors affecting valuations, including rising treasury rates, trade uncertainties, and the impact of the new administration's policies. The report notes a valuation gap between buyers and sellers, exacerbated by increasing borrowing costs. It also discusses the pent-up demand from private equity firms, which are facing pressure to sell portfolio companies while simultaneously needing to invest raised funds. The document presents data indicating a 16 percent decline in the number of transactions compared to the previous quarter, although the average deal value has increased. Additionally, it highlights the performance of various sectors within the middle market, noting significant declines in real estate and healthcare, while some sectors like food and beverage have outperformed the S&P 500. Overall, the report emphasizes the sluggishness of the M&A market amid ongoing uncertainties.