A Deal Making Outlook for 2nd Half of 2025 – M&A Perspective for the Middle Market

I. Introduction: Changing Times for Business Owners

If you’re running a successful business in the service industry, or in trades like plumbing, HVAC, landscaping, or other boots-on-the-ground business, you’ve likely heard the whispers: “It’s a good time to sell.” Then again, you probably also heard that in 2021. And 2018. And from your brother-in-law who still thinks crypto is going to the moon.

But here’s the deal: in the first half of 2025, the M&A market for trades and service businesses didn’t just hold steady—it matured. Buyers are savvier. Sellers are better prepared. And the “gold rush” mentality has given way to more disciplined, deal-driven thinking.

If your business has solid recurring revenue, good margins, and isn’t entirely dependent on you showing up every day at 7 a.m. with a coffee and a wrench, then the second half of 2025 might just be your window.

In this post, we’ll break down what’s really happening in the market, who’s buying (and why), what they’re willing to pay for, and how to get ahead of the curve—before the next political and financial surprises change the market dynamics all over again.

II. What H1 2025 Revealed About the Market

The first half of the year was… well, selective. Deals are still getting done, but the “spray and pray” days of buying anything with cash flow are gone. Buyers are picky, lenders are cautious, and due diligence feels more like a root canal than a handshake deal over lunch.

That said, service-based businesses with recurring or contract-driven revenue (think maintenance agreements, service plans, or multi-year commercial cleaning contracts) saw strong buyer interest. Even better if those revenues weren’t tied to one or two customers—or one exhausted owner.

Some macroeconomic storm clouds still hover: interest rates are steady but high-ish, tariffs continue to ping-pong across all sectors and threaten with inflationary price effects, and geopolitical tensions make some investors twitchy, especially from abroad. But for trades and services? The essentials are constant: Pipes leak. Lawns grow. Networks crash. And people pay for it.

III. Economic and Financing Outlook: The Credit Tide Is Turning

The financing environment in H2 2025 is the economic equivalent of “partly sunny with a chance of headaches.” The Fed has signaled that rate cuts might be on the horizon, but banks are still operating like the guy who brings his own calculator to split the dinner check—cautious and detail-obsessed. Moreover, if analysts’ expectations for the tariff-driven uptick in inflation come true, the Fed will have to react, and reverse course.

That said, deals under $10M are seeing more traction, particularly with a solid deal structure of buyer downpayment, SBA loans, seller-financing, and earnouts. On the other hand, if your books look like they were written in the back of a truck cab on lunch break… let’s just say lenders aren’t loving that.

For sellers, the takeaway is simple: clean books, documented systems, and healthy margins are worth real money. Sloppy financials? That’s a discount—if you get an offer at all.

Operational efficiency and strong reporting are no longer “nice to haves.” They’re deal-makers—or deal-killers.

IV. Who’s Buying: PE Lite, Consolidators, and Strategic Operators

Gone are the days when only big firms with suits and skyscrapers bought companies. Now, a lot of the action comes from “PE-lite” players—search funds, independent sponsors, and newly minted MBAs with a dream and a lending partner.

These folks are often targeting businesses doing $1–$5M in EBITDA. They’re professional, savvy, and often looking to step into the owner’s shoes (sometimes literally).

Meanwhile, national roll-up platforms continue to gobble up regional players in HVAC, pest control, landscaping, and janitorial services. Their playbook? Acquire local market leaders, plug in systems, and scale like crazy.

Also in the game: strategic buyers looking to expand geography, talent pools, or service lines. Think of them like Pac-Man—hungry, fast, and always looking for the next deal to gobble.

V. What Buyers Want in Trades & Services

Want to command top dollar? Here’s what buyers actually want in 2025:

• Recurring revenue: Maintenance contracts, service plans, long-term B2B agreements—they all translate to stability and valuation premiums.
• Tech-enabled operations: If you’re still scheduling crews on a whiteboard, we need to talk. Field service software, CRMs, and basic automation make buyers breathe easier.
• Diversified customers: No one wants to buy a business that loses 40% of revenue if your cousin Bob stops calling.
• Strong team in place: If you’re still the guy fixing boilers, managing QuickBooks, and quoting jobs all on your own —you’re not selling a business, you’re selling a job. That’s not what buyers want.

Red flags? High owner dependency, razor-thin margins, and no digital trail (website, reviews, process documentation). Translation: work on the business before trying to sell it.

VI. Sector Outlook: Hot Niches in Trades & Services

Here’s where buyers are leaning in—and where they’re backing off:

Hot Sectors:

• Commercial HVAC & Plumbing – Aging infrastructure + regulatory upgrades = goldmine.
• Landscaping & Facilities Maintenance – Especially with recurring B2B contracts.
• Senior Home Services & Mobility – Demographics don’t lie. The Boomers are here.
• IT-Managed Services – Businesses need uptime. And someone to blame when it goes down.

Slower Movers:

• One-man-band operations with no team or SOPs.
• Businesses reliant on handshake deals and “relationships” with no contracts.
• Generic labor services with no brand, tech, or differentiation.

VII. Preparing for a 2025–2026 Exit: Why Now Might Be Optimal

Here’s the thing: valuations are still holding strong—especially for well-run service companies. But the balance of power is subtly shifting back toward buyers.

And let’s not ignore the elephant in the room: 2026 is an election year. If there’s one thing markets hate more than a messy QuickBooks file, it’s political uncertainty. Add in potential tax changes (the 2017 capital gains provisions are expiring at the end of 2025), and many owners are starting to whisper that now beats later.

If you’re thinking of selling in the next 12–18 months, your runway starts now. Don’t wait for the first frost of Q1 2026 and find out the market cooled before you have started your homework.

VIII. Actionable Steps for Business Owners

So, what should you do today if you’re eyeing a sale?

1. Get a valuation benchmark. You may be worth more (or less) than you think.
2. Clean up your books. Hire a part-time CFO if needed. It pays off.
3. Strengthen your team. A buyer wants to see who’s staying when you go.
4. Start pre-diligence now. Don’t wait until someone’s asking questions you can’t answer.

Selling your business is a process—not an event. Start preparing like you’re getting ready for the big game. Because, well, you are.

Bonus Sidebar: Top 5 Deal Killers in the $1M–$40M Trades & Service Space

1. All revenue tied to one client—or one relationship.
2. No written processes or documented systems.
3. Tax returns that don’t match internal books.
4. No second-in-command or management bench.
5. The seller is saying “I’ll just stay on for 5 years after the sale.”

Want help navigating the sale of your trades or service business in 2025? Don’t go it alone—or worse, wait too long. The next six months might just be your best shot. Reach out today!