How is Mid-Market M&A Demand Faring?: Q&A with Mufson Howe Hunter’s Joe Golden
Joe Golden, managing director at Mufson Howe Hunter, is optimistic about the continued rise in deal activity throughout the remainder of the year. He sees compelling opportunities in infrastructure products & services, among other sectors. Given the new administration’s emphasis on infrastructure development, Golden’s insights align with broader trends in M&A, particularly in sectors benefiting from increased government spending and policy support.
Golden discussed how investors’ approach to M&A transactions has shifted in the current market environment, the industries that are seeing the most deals, and how sellers can maximize valuations, among other topics.
CM: How has the approach to M&A transactions changed in the current market?
JG: M&A activity in 2023 and 2024 was below average, largely due to higher interest rates. A higher cost of capital generally leads to lower valuations and, in some cases, lower returns on invested assets for financial buyers. As a result, fewer sellers and buyers entered the market over the past two years.
That said, deals still got done—some at strong valuations—but we saw a significant increase in structured transactions. Buyers incorporated more contingent considerations, such as seller notes, earnouts, and retention bonuses. Due diligence also became more rigorous and time-consuming.
Given these dynamics, we’ve placed a greater emphasis on working closely with financial planners. At the end of the day, it’s not just about how much a seller gets for their business—it’s about how much they keep. Strong financial planning is more important than ever.
CM: What industries are seeing the most M&A activity in the middle market?
JG: We’re seeing significant activity in industrial, construction, and manufacturing sectors—industries we know well. Federal infrastructure investments and the surge in data center spending, fueled by the rapid growth of Generative AI, have been key drivers.
Energy and other sectors are also expected to pick up momentum with anticipated deregulation. Tech remains a major focus, and as Generative AI continues to gain traction, many tech firms will become even more attractive targets.
CM: How has financing changed for transactions?
JG: As noted, higher interest rates have led some financial buyers to rely more on seller financing rather than traditional bank or institutional funding. These higher rates have also depressed valuations in certain cases, making financing a more complex aspect of deal structuring.
CM: Are companies still pursuing cross-border M&A?
JG: Absolutely. We actively partner with M&A affiliates across Europe, Asia, and Australia and closely track cross-border activity. Many non-U.S. buyers are eager to establish a foothold in the U.S. across various industries.
CM: What are the biggest challenges in executing middle-market M&A deals today?
JG: Patience is more important than ever. While both strategic and financial buyers are sitting on significant capital, they are also being far more cautious. Due diligence is taking longer and is more exhaustive than in the past.
That said, valuations remain strong—and in some cases, exceptionally high. Sellers must be prepared for a longer timeline to close deals, but experienced investment bankers can help navigate this process efficiently.
CM: How can sellers maximize valuation in the current market?
JG: We love this question. Here are four key ways sellers can position themselves for maximum value:
Be a strategic imperative. Understand your market landscape and identify the most aggressive acquirers. The CEOs of strategic buyers are under immense pressure to grow—if you can position yourself as a must-have rather than a nice-to-have, securing a premium valuation becomes much easier. We work closely with our clients to map this out.
Know your growth plan. Buyers want predictable, sustainable growth. Build a five-year financial model backed by a detailed pipeline and, where possible, a CRM. We invest significant time helping our clients develop robust growth strategies.
Ensure financial reporting is rock solid. Buyers need reliable, timely updates on trailing 12-month (TTM) revenue and EBITDA. Nearly every deal requires a quality of earnings report from a third-party firm, and strong financial reporting is often overlooked by sellers.
Plan your personal finances well in advance. Without proper planning, sellers risk leaving significant money on the table. Thoughtful financial planning can make a major difference in the outcome.
CM: What advice do you have for business owners considering an exit?
JG: Start planning early. Engage with your investment banker and financial planner well in advance of entering the M&A market. Proper preparation can significantly impact valuation, deal structure, and the final amount you take home.
CM: What’s the outlook for M&A in 2025?
JG: A slow start but a strong finish—pent-up demand is poised to drive a surge in activity later in the year.
