Reflecting on 2024: Lessons and Opportunities in M&A

By Dr. Aaron Mahl, EVP Business Development, iTValuations

As the year winds down, we recently hosted our final webinar of 2024: M&A in 2024: A Year in Review. It was a privilege to sit down and chat with my colleague Reed Warren, CEO of iTValuations, and Brian Miller, CEO of FusionTek, as we unpacked key trends, challenges, and opportunities in the M&A landscape. This year was characterized by a unique mix of challenges and opportunities, and as we prepare for 2025, several insights stand out.

A Year of Contrasts in M&A

Reed Warren highlighted some key takeaways from 2024. While 2023 saw a higher transaction volume, 2024 brought about more selective activity. “The quality of sellers seemed to decline,” Reed noted, as the high-value companies were largely acquired in prior years. This year saw a noticeable disparity between top quartile and bottom quartile firms. Top-tier companies continued to command premium valuations, while median and lower-quartile firms faced increasing pressure as buyers became more sophisticated and due diligence processes intensified.

Another significant trend was the continued impact of economic factors such as interest rates and evolving market conditions. For buyers and sellers alike, these factors meant adapting to a more rigorous environment where financial stability and operational excellence were key differentiators.

The Buyer’s Perspective: FusionTek’s Approach

Brian Miller provided an enlightening perspective on strategic acquisitions, emphasizing the importance of understanding both client and employee dynamics.

“We’re not just acquiring revenue streams,” Brian explained. “We’re investing in relationships – with clients and employees alike.” For FusionTek, this means identifying MSPs whose values align with their own and ensuring a smooth integration process that respects the culture and relationships built by the acquired business.

Brian also pointed out the importance of addressing compliance and cybersecurity challenges, which are increasingly becoming table stakes in the industry. “For buyers like us, having a clear roadmap to address these challenges is critical,” he said, reflecting on how these factors shape acquisition decisions.

Preparing for 2025

Looking ahead, Reed Warren and Brian Miller shared their perspectives on what the first half of 2025 might hold.

1. Market Dynamics: Reed predicted a growing divide between top and bottom-quartile firms. Top performers with structured operations and financial rigor will continue to command premiums, while others may struggle to find interested buyers.
2. Opportunities for Buyers: Brian emphasized the need for strategic buyers to plan ahead and leverage creative financing options. By focusing on both client retention and employee satisfaction, FusionTek aims to drive sustainable growth.
3. Financing Insights: Reed underscored the importance of planning ahead for strategic acquisitions, leveraging assets beyond SBA loans to remain competitive. He encouraged firms to overcome their hesitation to take on debt, viewing it as a valuable tool for growth.

The Path Forward

As we concluded the webinar, it was clear that 2025 presents immense opportunities for those who are prepared. Whether you’re considering a sale, looking to grow through acquisitions, or simply aiming to enhance your firm’s value, now is the time to focus on building a solid foundation. With market velocity picking up, particularly in the top quartile, the importance of preparation and strategic alignment cannot be overstated.

On behalf of iTValuations, we thank all of you who joined our webinars throughout the year. We look forward to continuing the conversation in 2025 and beyond as we navigate the evolving M&A landscape together. Click here to continue the conversation.