Business Services M&A activity strengthened through Q4 2025, with 930 closed transactions over the last twelve months (LTM), up from 722 in the prior year. Valuations remained constructive, with median TEV/EBITDA at 11.60x and TEV/Revenue at 1.35x, reflecting steady investor appetite for scalable, recurring‑revenue service models.
Strategic buyers accounted for nearly 89% of deal flow, continuing to consolidate fragmented segments such as IT services, outsourcing, facilities management, and human capital solutions. Despite a mixed macro backdrop, demand for efficiency, automation, and digital transformation supported robust activity across the sector.
“This industry has strengthened through 2025 as it was supported by strong demand for outsourced and technology-enabled services,” said Ali Masoud, Director at PCE. “Strategic buyers prioritized predictable cash flows, customer retention, and scalable platforms heading into 2026.” 1
Valuations in Business Services held firm in Q4 2025 as buyers prioritized assets with predictable cash flow, technology‑enabled delivery models, and strong customer retention. EBITDA multiples of 11.60x reflect disciplined but active competition for high‑quality platforms, while revenue multiples of 1.35x signal continued interest in businesses with scalable service lines.
Transaction volume rose meaningfully year‑over‑year, driven by consolidation in outsourced services, back‑office automation, and specialized B2B service providers. Labor‑intensive segments continued to face margin pressure, but technology‑enabled operators benefited from expanding demand for workflow digitization and cost‑reduction solutions. 1
Strategic Acquirers: Strategic buyers dominated Q4 2025 activity, representing 823 transactions (88.49%) in the LTM period. Corporate acquirers continued to pursue scale, geographic expansion, and integrated service offerings across IT services, business process outsourcing, environmental services, and professional services. The largest strategic transactions included acquisitions of Steelcase Inc., Aris Water Solutions, and AvidXchange Holdings, reflecting interest in technology‑enabled operations, infrastructure‑related services, and workflow automation platforms.1
Financial Buyers: Financial sponsors completed 107 transactions (11.51%) in the LTM period, selectively targeting recurring‑revenue platforms and niche service providers. Sponsor activity focused on compliance services, advisory firms, and infrastructure‑adjacent businesses. Representative transactions included acquisitions of Heidrick & Struggles International, Wicklander‑Zulawski & Associates, and TierPoint, highlighting continued sponsor interest in human capital, training, and data‑center‑related services. 1
Business Services M&A outperformed several cyclical sectors in 2025, supported by stable demand for outsourcing, digital transformation, and cost‑reduction solutions. While valuations moderated from peak levels, the sector remained more resilient than asset‑heavy industries facing higher capital costs. Compared with high‑growth technology segments, Business Services saw steadier but less valuation expansion, reflecting its mix of recurring revenue, labor‑intensive operations, and scalable service models. Looking ahead, the sector is positioned for continued consolidation in 2026 as companies pursue efficiency, automation, and integrated service delivery.
Top U.S. States: Deal flow remained geographically diversified across major hubs. California led all states with 94 transactions, followed by Texas (91), New York (69), Florida (53), and Pennsylvania (52). 1
Cross-Border Trends: Cross‑border activity remained steady, with U.S. business services targets continuing to attract foreign buyers seeking scale, market entry, and access to the world’s largest B2B services economy. International acquirers remained active in technology‑enabled services, infrastructure‑related operations, and specialized professional services.
| Target | Buyer | Value ($mm) |
| Steelcase Inc. | HNI Corporation | $2,857.90 |
| Aris Water Solutions, Inc. | Western Midstream Partners, LP | $2,753.90 |
| AvidXchange Holdings, Inc. | TPG Capital, L.P.; Corpay, Inc. | $2,088.20 |
| Heidrick & Struggles International, Inc. | Advent International, L.P.; Corvex Management LP | $1,397.20 |
| Purge Rite, LLC | Vertiv Corporation | $1,250.00 |
| Heartland Payroll Solutions, Inc. | Undisclosed | $1,100.00 |
| Paragon Energy Solutions, LLC | Mirion Technologies, Inc. | $585.00 |
| Target | Buyer | Value ($mm) |
| Heidrick & Struggles International, Inc. | Advent International, L.P.; Corvex Management LP | $1,397.17 |
| Wicklander-Zulawski & Associates, Inc. | Red Knot Capital LLC | n/a |
| Thompson Advisory Services, LLC | Mercer Global Advisors Inc. | n/a |
| Jones Lake Management | Leonard Green & Partners, L.P. | n/a |
| TierPoint, LLC | Argo Infrastructure Partners LP | n/a |
| Target | Buyer | Value ($mm) |
| Steelcase Inc. | Undisclosed | $2,857.90 |
| Aris Water Solutions, Inc. | Undisclosed | $3,753.90 |
| AvidXchange Holdings, Inc. | BlackRock, Inc.; The Vanguard Group, Inc.; FMR LLC; MasterCard Investment Holdings, Inc | $2,088.20 |
| Heidrick & Struggles International, Inc. | BlackRock, Inc.; The Vanguard Group, Inc.; Renaissance Technologies LLC; Dimensional Fund Advisors LP; MAK Capital One, LLC | $1,397.20 |
| Purge Rite, LLC | Milton Street Capital, LLC | $1,250.00 |
Source S&P Capital IQ as of 1/3/2026 and PCE Proprietary Data
Opportunities: U.S. business services firms can capitalize on continued expansion even amid slowing growth — December’s purchasing managers’ index remained above expansion territory at 52.9 for services — signaling that demand persists despite moderation. Service providers with pricing power and cost‑management technology investments are likely to attract strategic interest as buyers seek stable revenue streams.6
Risks: Slower growth momentum — with the composite purchasing managers’ index sliding to 53.0, the weakest in six months — suggests that new order inflows are softening. This could compress topline growth and delay deal execution among smaller service firms entering early 2026.6
Predicted Activity: M&A activity in business services is expected to remain selectively robust, with deals concentrated in subsectors displaying resilient demand and margin expansion. However, slower macro growth in early 2026 could push some buyers toward smaller, accretive bolt‑on transactions rather than large platform deals.6
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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