July 21, 2025
In uncertain economic times, private equity (PE) typically becomes one of the most active — and opportunistic — players in the mergers and acquisitions (M&A) space. With record levels of dry powder and a renewed focus on value creation, PE firms across North America are doubling down on mid-sized businesses with growth potential in 2025.
To fully understand the opportunities and challenges this presents to mid-sized business owners in the United States and Canada, we need to unpack how private equity operates during downturns, what’s shaping the 2025 deal landscape in North America, and how you, as a mid-sized business owner, can strategically position yourself to sell your business on your terms — not theirs.
Private Equity traditionally hold vast unspent capital. As of June 2025, North American PE houses sat on approximately $1 trillion in dry powder, according to PricewaterhouseCoopers (PwC), locked up as deals stalled amid high interest rates, tariff turbulence, and general uncertainty.
PE firms often deploy “dry powder” — unspent capital — during economic turbulence, targeting mid-market companies overlooked by strategic buyers. With hundreds of billions at their disposal, PE firms can pursue carve-outs, distressed assets, and companies with growth potential ripe for operational improvements
Recent history shows that PE-acquirers outperform in the M&A market during downturns. A few examples include:
PE typically adapts during downturns by using creative deal structures, such as:
As we move deeper into 2025, the macro picture is shifting fast — redefining how buyers source, structure, and exit deals. Here’s a snapshot of the most decisive trends now reshaping North American M&A:
Global PE dry powder remains around US $2.5–2.9 trillion, with North America holding more than its fair share – US $1 trillion. This translates to aggressive capital readiness in the U.S. and Canada even as interest rates and geopolitics dampen activity.
Q2 2025 saw global M&A reach $1.89 trillion — 30% above Q1 2024 — with PE-driven transaction values surging even as volume dropped, as reported by Axios.
U.S. PE-backed deal value grew 21% year-on-year, even as counts fell by 20%, showing a preference for larger, strategic deals.
Canadian PE is particularly active in targeting U.S. enterprises — particularly tech, energy, healthcare — driving cross-border deal-making that leverages supply chain diversification and tariff hedging.
New U.S. tariffs and delays in policy clarity have stalled many mid-market deals. PE firms hesitate amid these risks, stoking deal pipeline disruptions. Still, many are seizing opportunity: U.S. funds are using private credit and novel financing strategies to secure deals that strategic buyers shy away from.
Looking ahead, private equity is uniquely positioned to capitalize on the current market cycle. Here’s why the coming phase could play to PE’s strengths:
PE’s dry powder has hovered near record levels (around $2.5 trillion globally, and $1 trillion in North America), albeit that dry powder reserves are slowly decreasing as more deals close.
PE share of North American M&A has risen from 10–15% pre-2008 crisis to 30–35% — and now approaches nearly 35% of global deal count, as reported by PitchBook.
As credit conditions ease and deal execution improves, PE is set to drive the next surge in M&A markets, especially in carve-outs, distressed assets, and growth sectors like tech, healthcare, and essentials — further reinforcing its role as the opportunistic acquirer.
For mid-sized business owners in the U.S. and Canada, these shifts in private equity and M&A aren’t just theoretical — they carry real-world implications. Here’s what you, as a mid-sized business owner looking to sell your business, need to consider before making your next move:
With PE cash at historic levels, selling your business now can attract multiple suitors — even in slow equity markets.
PE firms are demanding in-depth due diligence. They expect strong value creation plans, from digital transformation and pricing optimization to leadership and AI implementation.
Traditional exits are slower, but PE offers alternatives: continuation funds, structured roll-ups, or dual-track IPOs, especially in Canada.
If selling to a Canadian PE buyer, consider potential U.S. tax, tariff, and competition law implications.
In a market shaped in equal measures by uncertainty and opportunism, preparation is everything. These strategic tips can help sellers navigate the current environment with confidence and clarity:
Build internal plans for operational improvements and pricing before engaging PE buyers.
Be ready to share audited financials, cost structure analyses, and AI- or tech‑driven transformation roadmaps.
PE firms face Limited Partnership (LP) demands to deploy capital and generate returns — this energy can play to sellers’ advantage in timing.
Exits via IPO, partial recapitalization, or continuity vehicles may appeal more in the current business climate.
With market dynamics continuing to evolve, staying ahead of the curve is key. Here’s a look at what buyers and sellers can expect in the months ahead:
If interest rates ease and tariffs stabilize, deal flow — especially in the mid-market — should accelerate into late 2025 / early 2026.
As PE firms hunt high‑quality carve-outs, valuations with strong fundamentals may stay buoyant.
Operational upside, digital transformation, and AI alignment become key deal sweeteners.
Even amid economic uncertainty, it’s a sellers’ market — but only if you’re prepared, because:
Ultimately, if you’re contemplating a sale, now is the time to align with PE expectations: sharpen efficiencies, technology integration, and clarity on your growth roadmap.
Thinking of selling your business in the next 6-36 months? Woodbridge has a solid network of vetted private equity buyers waiting to snap up strategic assets in the U.S. and Canada. Contact us today to find out how our M&A experts can help sell your business to the right buyer, at the right price.