The Business Services sector saw measured M&A activity in Q1 2025, with 751 transactions closed (LTM), reflecting a slight rebound from Q1 2024’s 747 deals but remaining below 2023’s peak of 902. Strategic buyers dominated 85% of transactions, while private equity (PE) firms focused on consolidating fragmented subsectors like staffing and facilities management. Valuation moderated multiples, with median TEV/EBITDA declining to 11.43x and TEV/Revenue to 1.27x, down from 12.25x and 1.50x, respectively, signaling a broader shift toward profitability-focused metrics. The following section explores key drivers and trends shaping the sector.
Transaction volume showed signs of stabilization in Q1 2025, following a 14% YoY decline from 2023’s peak—largely influenced by persistent macroeconomic uncertainty and higher borrowing costs. Valuation trends indicate a shift in investor focus toward profitability, as revenue multiples declined 13% YoY. Notably, companies with recurring revenue models continued to achieve stronger EBITDA multiples, underscoring a key strategy for business owners navigating a more selective market environment.
Strategic Acquirers: Drove 636 deals (87.2% of total), targeting tech-enabled capabilities in AI, compliance automation, and cloud consulting. Examples include Thomson Reuters’ $600M acquisition of cPaperless.
Financial Buyers: PE firms accounted for 93 deals, prioritizing platform builds in fragmented markets. Silver Lake’s $20.6B take-private of Endeavor Group exemplified large-scale consolidation in tech-enabled services.
The Business Services sector showed resilience with transaction volumes stabilizing at 751 deals in Q1 2025, highlighting its attractiveness amid economic uncertainty. Valuation multiples moderated to 11.43x EBITDA and 1.31x revenue, reflecting investors' measured confidence and continued interest in the sector.
Top U.S. States: California (91 deals), Texas (62), and New York (46) led activity, driven by tech hubs and regulatory complexity.
Cross-Border Trends: Nearshoring to Latin America (LATAM) surged in BPO and IT services, offsetting geopolitical risks in Asia.
| Target | Buyer | Value ($mm) |
| Endeavor Group Holdings, Inc. | Silver Lake Technology Management, L.L.C. | $20,588.00 |
| Summit Materials, Inc. | Quikrete Holdings, Inc. | $12,224.00 |
| cPaperless, LLC | Thomson Reuters Corporation | $600.00 |
| Registered Agent Solutions, Inc. | Wolters Kluwer Financial Services, Inc. | $415.00 |
| Stronghold Digital Mining, Inc. | Backbone Mining Solutions LLC | $219.00 |
| Target | Buyer | Value ($mm) |
| Educational Partners International, LLC | Markel Group Inc. | $167.70 |
| Fiber Materials Inc. | Tex Tech Industries, Inc. | $165.00 |
| Healthcare Staffing Professionals, Inc. | TrueBlue, Inc. | $42.00 |
| Applied Energy Group, Inc. | ICF International, Inc. | $38.00 |
| TRS Group, Inc. | Parsons Corporation | $36.00 |
| Target | Buyer | Value ($mm) |
| Carolinas Investment Consulting, LLC | CapFinancial Partners, LLC | n/a |
| Berkeley Research Group, LLC | TowerBrook Capital Partners L.P. | n/a |
| The Crom Corporation | Frontenac Company LLC | n/a |
| Geller & Company, LLC | Corient Private Wealth LLC | n/a |
| Aperture LLC | Genstar Capital, LLC | n/a |
Source S&P Capital IQ as of 4/21/2025 and PCE Proprietary Data
Key trends shaping Business Services M&A:
Opportunities: Demand for tech-enabled cost reduction tools and ESG advisory services is expected to accelerate through acquisitions that deliver process efficiency or meet evolving compliance standards.
Risks: Rising wage inflation and labor costs continue to pressure staffing and business services providers, particularly in labor-intensive verticals.
Predicted Activity: A steady uptick in PE-driven divestitures and carve-outs is expected in Q2, as firms respond to high interest rates and portfolio optimization strategies.
Nicole Kiriakopoulos |
Michael Rosendahl |
Joe Anto |
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Data Assumptions This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only. Glossary EBIT - Earnings Before Interest and Taxes Sources:
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