Q1 2025 Strategic Insights
CEO Confidence Hits Multi-Year Low Amid Tariff Concerns
April 2025: CEO confidence has reached its lowest point in years, primarily due to escalating tariff tensions and growing recession forecasts. A survey by Chief Executive reveals that many U.S. CEOs now anticipate a recession within six months, citing tariff-related uncertainties.
- Tariff Impact: Disrupted supply chains and increased costs are pushing firms toward conservative strategies.
- Recession Forecasts: Most CEOs expect a mild to severe downturn, prompting delayed investments.
Healthcare M&A Activity
Despite economic headwinds, the healthcare sector—especially Revenue Cycle Management (RCM) and Healthcare IT—has remained active:
- GeBBS Healthcare Solutions acquired by EQT for ~$850M, showcasing the value of tech-enabled RCM.
- Access Healthcare received growth funding from New Mountain Capital for expansion.
- Firstsource Solutions acquired MedAssist for $330M, strengthening its U.S. footprint.
- Clearlake Capital acquired Modernizing Medicine (ModMed) in a $5.3B LBO—the largest in the healthcare sector this year.
Conclusion: Healthcare tech and services remain resilient and strategically important amid macroeconomic uncertainty.
Q2 2025 Strategic Insights
Second-Half 2025 M&A Outlook: Small-Cap Private Deals Set for Rebound
Q2 2025 revealed resilience in value despite stagnating volumes, with dealmakers treading cautiously amid rate uncertainty, tight credit, and shifting regulations. However, the forecast for the second half of 2025 is cautiously optimistic, with room for upward momentum in both volume and value — especially in technology, healthcare, and AI-driven plays.
Key Forecasts (H2 2025)
| Metric | Base Case | Upside Scenario | Downside Scenario |
|---|---|---|---|
| Deal Volume | +1–3% YoY | +5–7% (PE deployment, policy clarity) | Flat or –2% (macro drag) |
| Deal Value | +5–10% YoY | +10–15% (AI/digital-led M&A) | 0 to –5% (tariffs, high rates) |
| Sectors to Watch | Tech, digital media, cyber, health | Clean energy, biotech, AI-focused | Energy/industrial may stall |
Trends & Catalysts
- Private Credit Surge: Non-bank lenders drive activity with more flexible terms (4.5× EBITDA), but at higher costs.
- Regulatory Tailwinds: The incoming Trump administration is expected to ease antitrust scrutiny, speeding up deal approvals.
- Dry Powder & Exit Pressure: $1T+ in PE dry powder and 30,000+ aging portfolio companies may push PE firms toward exits.
- Valuation Stabilization: Multiples may rebound from 9.1× to 9.5–10× EV/EBITDA as confidence returns.
- Tech/AI Deals: Small-cap AI infrastructure and niche SaaS continue to attract premium bids, especially from strategics.
Sector Highlights
What-If Scenarios to Monitor
- Fed Rate Cuts (Sept/Dec): Could unlock 5–7% volume growth.
- Tariff Escalation: May stall energy/industrial deals.
- AI Boom Continues: Tech deal value may grow 12–15%.
- Energy Price Shock: Could halt mid-cap energy M&A entirely.
Challenges
- Financing Constraints: Banks require <2.0× EBITDA leverage; non-banks offer up to 4.5×, but at higher costs.
- Exit Backlog: PE exit periods rose to 6.4 years (from 5.1 in 2021), delaying exits for 30,000+ portfolio firms.
- Valuation Misalignment: Sellers anchored in 2021 levels clash with buyers focused on current fundamentals.
Key Sources for Deeper Reading
- Global M&A Trends & U.S. Impact — “There was around $1.89 trillion of global M&A activity in H1 2025, up 30% YoY…” (Axios)
- Energy Sector Analysis: Upstream M&A — “Upstream M&A opened 2025 with $17 billion…” (Enverus Intelligence)
- AI’s Growing Role in M&A — “Add AI to deal origination tactics…” (McKinsey)