The SMB M&A Pipeline: Q2 2025

Welcome to the Q2 2025 issue of The SMB M&A Pipeline, the quarterly series that surfaces a top-of-the-funnel breakdown of the deal activity on Axial’s platform. The aggregated metrics include quarterly deal volumes, financial and geographic characteristics, and pursuit rates, sorted by industry category.

All deal data is fully anonymized to protect the confidentiality of these transactions.

Pursuit Rates

“Pursuit rate” measures the rate at which Axial’s buyside members register interest in a deal that an Axial sell-side member has invited them to consider. If NDAs, IOIs, and LOIs reflect the deepening progression of interest among acquirers on a given deal, the pursuit rate is one step higher in the funnel than the signed NDA. It offers insight into the forward deal pipeline and the initial interest level of prospective Axial buyside members.

An Overview of Q2 2025

Q2 2025 saw continued growth in deal supply on Axial, with all seven major industries reporting year-over-year increases in the number of marketed deals. Business Services posted the highest increase (47.42%), followed closely by Food & Hospitality (+43.49%) and Healthcare (+39.02%). Industrials and Consumer Goods experienced steady growth, with both industries increasing by more than 23%. Transportation saw a more modest rise of 5.36%, suggesting either a limited pipeline of ready-to-sell businesses or more cautious timing among owners. Overall, the continued increase in deal volume signals sustained sell-side engagement and a confident outlook heading into the second half of the year.

Deal Volume vs. Pursuit Rate

Industrials remained a balanced and active sector, with strong deal flow matched by high buyer interest, ranking 1st in deal volume and 2nd in pursuit rate. This likely reflects continued demand for essential services and infrastructure businesses, especially as buyers prioritize supply chain stability and domestic manufacturing. Technology, while only mid-ranked in deal volume, attracted the highest pursuit rate—suggesting buyers are competing for a limited pool of attractive, scalable tech assets, particularly those with recurring revenue or automation capabilities.

Transportation also showed a notable supply-demand mismatch. Despite ranking last in deal volume, it placed 3rd in pursuit rate, likely due to continued interest in logistics and last-mile delivery businesses, which remain critical in an e-commerce-driven environment. In contrast, Food & Hospitality and Consumer Goods posted high volumes but low pursuit rates, pointing to buyer selectivity. Inflationary pressure, labor challenges, and shifting consumer behavior may be contributing to caution around these sectors.

These trends underscore the market’s preference for high-quality, defensible businesses, even as deal volume remains elevated across the board.

Below is a breakdown of industry-specific and overall deal activity on Axial in Q2. Feel free to incorporate this data into your materials as you see fit.

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Deal Intent Definition: A project created by a buyside member on Axial to signal the types of businesses they are actively looking to acquire or invest in, based on criteria like industry, size, and geography. Based on the specified range, deal intents can fall into multiple EBITDA buckets (e.g., $1M–$4M falls into both $1M–$3M and $3M–$5M).

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