2025 in Review: Lessons Learned from Business Sales This Year

As we close the books on 2025, the mergers and acquisitions (M&A) landscape has provided a wealth of data and insights for business owners. This year was defined by a shift away from the "growth at all costs" mentality toward a market that rewards stability, transparency, and operational excellence. For those looking to sell in 2026 and beyond, the successes and failures of 2025 offer a clear roadmap for maximizing value.

Here are the key lessons learned from the business sales market over the past twelve months.

The Shift Toward Quality and Precision

In 2025, "Quality of Earnings" (QofE) became the most critical factor in deal closings. Buyers—particularly private equity groups—moved away from speculative multiples and focused intensely on the sustainability of cash flow.

• Transparency over Hype: Deals that struggled this year were often those with "messy" financials or high owner dependency. Conversely, businesses that had undergone a pre-sale financial audit or a dry-run due diligence saw faster closings and fewer price renegotiations.
• Normalized EBITDA is King: Buyers in 2025 were less forgiving of vague "add-backs." Sellers who could clearly document and justify their non-recurring expenses maintained their leverage during price negotiations.

The "Due Diligence Fatigue" Is Real

A recurring theme in 2025 was the lengthening of the due diligence period. What used to take 60 days often stretched to 90 or 120 days as lenders and buyers exercised extreme caution.

• Information Readiness: Sellers who were not prepared with a comprehensive virtual data room (VDR) from day one often saw "deal fatigue" set in. When a process drags on, the likelihood of a buyer finding a reason to "re-trade" (lower the price) increases.
• The Importance of a Buffer: Successful sellers this year were those who continued to run their business as if they weren't selling. If performance dipped during the long due diligence window, buyers quickly lost confidence.

Structure Over Sticker Price

2025 taught us that the "headline price" is often less important than the deal structure. With a more disciplined lending environment, buyers used creative ways to bridge valuation gaps.

• The Rise of the Earnout: Many deals this year included earnouts—where a portion of the price is paid only if the business hits future targets. Sellers who understood how to negotiate protective "operating covenants" in these earnouts were the ones who actually collected their full payout.
• Equity Rollover: For sales to financial buyers, "rolling over" 10% to 20% of equity became standard. This "second bite of the apple" is now a primary way for sellers to achieve a total exit value that exceeds their original expectations.

The Technology Premium

2025 was the year where a company’s "Tech Stack" directly impacted its multiple. It wasn't just about having the latest software; it was about how that software protected the business's future.

• AI Integration: Buyers looked for businesses that had already begun integrating AI to automate routine tasks and reduce labor costs. A "digitally transformed" business was seen as more scalable and less risky.
• Cybersecurity as a Deal-Breaker: We saw several deals stalled or killed in 2025 due to poor data security practices uncovered during technical due diligence. Cybersecurity is no longer an IT issue; it is a fundamental valuation issue.

Preparation is the New Competitive Advantage

If there is one overriding lesson from 2025, it is that you cannot "decide to sell" on a Monday and go to market on a Friday. The most successful exits this year were the result of 12 to 24 months of deliberate preparation.

• Standard Operating Procedures (SOPs): Businesses that could prove they functioned perfectly without the owner present commanded significantly higher multiples.
• Customer Concentration: Sellers who spent the year diversifying their customer base avoided the steep discounts applied to businesses where a single client represented more than 20% of revenue.

Looking Forward to 2026

The lessons of 2025 suggest that 2026 will be a "seller’s market" for those who are prepared. Buyers have significant dry powder (unallocated capital) but remain highly selective. By focusing on clean financials, a strong management team, and a clear growth narrative, you can position your business to stand out in a competitive field.

The exit you want in the future starts with the decisions you make today.