Local dealmakers say 2025 should be a big year for M&A activity

When Mark McLochlin, 59, of Granger decided to sell his trucking company, Clearwater Logistics, he had both business and personal reasons for doing so.

In a famously cyclical industry, Clearwater Logistics was stable and profitable—a good way to catch a buyer’s interest. And McLochlin was leery of the growing burden of legal liability that all trucking companies are facing.

But Father Time also factored into his decision, McLochlin said. With children and grandchildren who live in different parts of the country, he wanted more time for travel and family while he’s still relatively young and healthy.

“I didn’t want to work until I was unable to enjoy life on a personal basis,” McLochlin said.

He sold his company in October to a sole proprietor who owns a trucking company in Kansas City.

The aging of America’s business owners is one factor—but by no means the only one—driving business acquisition activity.

Those in the business of facilitating acquisitions say the overall strong economy, the promise of a lighter regulatory environment from the Trump administration, lingering effects of the pandemic and a proliferation of would-be buyers all suggest 2025 will be a year of robust dealmaking.

“There’s kind of a pot with a lot of different ingredients that are starting to boil over now,” said Phil Daniels, the Indianapolis market president of Cincinnati-based investment bank ArkMalibu. “2025, 2026 and the foreseeable future is going to be really healthy for deal activity.”

ArkMalibu works with business owners to prepare their companies for sale, find a buyer and negotiate a deal. Daniels leads the company’s Indianapolis office, which opened last year and is ArkMalibu’s first regional office outside of Cincinnati.

See IBJ’s list of the biggest deals in 2024.

See a list of 2024 deals for which financial information wasn’t disclosed.

David Barbee, a New York City-based managing director at J.P. Morgan Chase & Co., is also anticipating strong deal activity this year. Barbee is focused on midmarket companies, which Chase defines as those with $20 million to $2 billion in revenue, and he works closely with the bank’s Indianapolis-based team.

According to a report from London-based financial data company Dealogic, U.S. merger and acquisition activity reached $1.7 trillion last year, a 9% increase over 2023.

Barbee said a combination of other factors, including general business optimism and recent interest rate cuts, mean this year should also be good for dealmaking. “Signs are pointing to positive momentum that will continue into 2025,” he said.

Daniels said disruptions during the pandemic caused some business owners to shelve their retirement plans, but now they are ready to exit.

“Well over half the business owners in America

are approaching retirement age,” Daniels said. “A lot of owners are looking to sell now. They don’t want to wait a few years.”

According to the U.S. Census Bureau, in 2022 (the most recent year for which data is available), 51.7% of U.S. business owners are 55 and older. Another 25.2% are age 45 to 54.

Interest rates

Not everyone sees the so-called “silver tsunami” of aging ownership as a major driver of current dealmaking activity. Josh Hollingsworth, a partner at Indianapolis law firm Barnes & Thornburg LLP, said the idea that baby boomer retirements are creating a wave of business ownership transitions has some basis in reality, “but it’s been oversold.”

Hollingsworth, who focuses his practice on mergers and acquisitions, attributes the increase in deals largely to a decline in interest rates. He said the previous period of rapid increases had put some deals on hold.

After a record year in 2021, Hollingsworth said, deal flow slowed in 2022 and 2023 before stabilizing last year. Dealmaking activity is now on the increase, he said.

But others say they do believe an aging population is driving deal demand. Ed Mysogland, managing partner at Indiana Business Advisors, said the acceleration in business sales “has more to do with age than anything else.”

“People are retiring, and they’re looking for exits,” said Mysogland, who is also a co-founder of BizSalebyOwner.com, a marketplace for buying and selling small businesses.

Between 60% and 70% of Indiana Business Advisors’ clients say they want to sell their business so they can retire, he said.

Indiana Business Advisors works primarily with Indiana-based businesses that are too small to engage an investment bank. Over the company’s 43-year history, it has helped facilitate 2,300 deals, Mysogland said. Its client base includes Clearwater Logistics, the Granger trucking company that changed hands last fall.

‘Feeding frenzy’

Another trend of note, Mysogland said, is an increase in the number of potential buyers flooding into the market. Prepandemic, his clients typically sold their companies to another business. But over the last few years, more and more individual buyers have entered the marketplace.

Mysogland said he believes that is partly because would-be business owners increasingly prefer to acquire an existing company rather than start one from scratch.

“There’s so many buyers looking for deals that it’s just a feeding frenzy when you have a great business.”

As an example, he said, a heating and air conditioning business he represented received 22 purchase offers in a week. Hollingsworth said private equity is keenly interested in business acquisitions right now because the firms are sitting on a lot of capital that they need to invest somewhere.

“If they don’t do deals, then they’re out of jobs—so they have to go do deals,” Hollingsworth said.

It’s not just the small mom-and-pop companies that are attracting interest, either.

In December, Indianapolis-based insurance technology company Remodel Health announced it had secured $100 million in growth funding from two investment firms: Connecticut-based OAK HC/FT and California firm Hercules Capital Inc.

As part of that deal, the firms acquired a 60% stake in Remodel Health, a fastgrowing company with 160 employees.

Remodel Health co-founder Justin Clements said the company had intended to seek outside investment this year, but it received so much interest from potential investors last year that it decided to move forward with a deal earlier than expected.

“Close to 50 private equity firms knocked on our door,” he said.

Getting prepared

Despite the strong market, advisers say business owners eyeing an exit would be wise to prepare.

Daniels said ArkMalibu typically works with clients for six to 12 months to get their business in the best shape possible for a sale. “It’s rare that we see a business that is ready to go on day one,” he said.

That work can include things like eliminating unnecessary debt and preparing the management team for changes to come, Daniels said.

Sellers should also decide what type of transition makes the most sense: selling to a peer company, to family members, to private equity or to employees through an ESOP (employee stock ownership plan).

“You have a whole slew of options,” Mysogland said.

Sellers should also be prepared to stay involved with the company for a time even after the sale closes. “The buyer wants the benefit of working with that seller to transition the business,” Mysogland said.

Another option, Hollingsworth said, is for the owner to have a succession plan in place that involves the owner stepping away from day-to-day operations in advance and moving into more of a governance role. “Demonstrate to the buyer that your business can run without you.”•