Navigating the 2025 M&A Market

Telecom Expense Management, Mobility, & IoT Sectors

In 2025, companies in sectors like Telecom Expense Management, Mobility Management Services, and IoT find themselves at a pivotal moment. These entrepreneurial and lower-middle-market companies often struggle with the funds needed to grow organically, modernize their products, expand how they reach customers, or even build a direct sales team. For these firms, finding the right financial backing or merger partners isn’t just about staying afloat; it’s about leveraging the market’s momentum to truly thrive and enhance shareholder value. The following highlights research Falcon Capital Partners has gathered and will continue to analyze.

Macroeconomic Factors and Federal Reserve Policies

Interest Rates Impact: All data suggest potentially lower interest rates are on the horizon. As an example, Goldman Sachs is predicting borrowing could become cheaper. This scenario could make companies more attractive for both growth and acquisition, as the cost to finance such moves drops.
Economic Growth and Technology Adoption: The upcoming economic surge, as outlined in McKinsey’s “The next big arenas of competition” report from October 2024, suggests a pressing need for these firms to secure funding or collaborate strategically – build alliances. The report points out that with technology becoming more vital in everyday life, there’s a rush to adapt or risk falling behind.
Global Connectivity Trends: Alliance Bernstein’s portfolio manager, Lei Qiu, recently (October 2024) described our world as entering a new digital society, one where connectivity reshapes how we live and do business. This transformation implies that startups in these tech sectors will need to find ways to scale internationally, often through partnerships or by merging with larger entities that already command global networks.

The Trump Administration’s Influence

Infrastructure Focus: Past administrations and the new Trump administration will continue a focus to modernize urban infrastructure, could be a goldmine for IoT, TEM, MMS, and even payment service providers. With less regulatory hurdles and potential investments in smart cities, defense, utilities, transportation, cyber security, etc. these firms might find themselves in high demand for acquisitions.
Deregulation and Streamlined Processes: Talks of regulatory simplification – such as “streamlined permitting” and page limits on federal environmental reviews – could mean less delays for infrastructure projects and that companies can spend less time navigating red tape and more time growing their business, creating higher demand for smart, cyber security, IOT/Mobile and other technologies. This could heighten M&A activities.
Tech Innovation Support: Despite potential government backing for tech advancements, many private businesses might still opt for M&A to gain quick access to necessary R&D resources and accelerate their growth.

Valuations and Deal Flow Considerations

Having undergone a valuation correction in recent times, tech valuations are anticipated to rise in 2025, especially for firms that have sustained or boosted their efficiency and growth through economic challenges, while also capitalizing on emerging tech like AI. However, this upward trajectory will be contingent on global economic and political climates, and how adeptly these companies can turn innovative technology into revenue streams. Current market sentiment, as reflected on X, points towards a notable increase in tech stock values, possibly up to 20% or more, provided the economic backdrop is favorable.

If capital or cash is tight for private business CEOs, they might push forward with M&A to leverage their unique tech or market position for better valuations, a strategy Bain & Company suggests could be lucrative (See: “Preparing for Exit: A Buyer’s Market Is Coming for Tech Assets | Bain & Company.”)

Increased M&A Activity: The lack of capital for lower-middle-market firms might make M&A not just an option but a necessity, either to gain new capabilities or to merge with bigger, financially stronger companies.

Three Critical Actions for Entrepreneurial Leaders

Strategic Planning and Positioning

Confirm your strategic vision for the business. Then, conduct an unconstrained assessment of growth opportunities and lay out your strategic options.

Where are you going? How will you get there? What will make you successful

Craft solutions that are uniquely yours. What makes your solutions different and worthy of investment? Stand out with innovation.

Seek out partnerships with larger entities for mutual growth, sharing technology, or breaking into new markets.

Operational Efficiency

Make the most of what you have. Partner with research bodies to share the load of innovation.

Look beyond traditional sales teams. Digital marketing, alliances or affiliate networks can be your growth engines.

Engage with an Investment Bank

Find a bank that gets your business, not just one that makes deals – find holistic support from bankers:

They should help you craft strategy, tell your story, find the right buyers, and make due diligence a breeze
They can help you improve your business and connect you with experts to streamline your operations, making you more appealing to buyers or investors
They’ll use their know-how to structure deals that get you the best return possible

The landscape of 2025 presents unique challenges and opportunities for entrepreneurial leaders in TEM, MMS, and IoT sectors. By securing capital through strategic partnerships or M&A, and by engaging with an investment bank that offers comprehensive support, these firms can not only navigate the M&A market effectively but also position themselves for successful growth or exit, thereby realizing the full potential of their ventures in rapidly evolving, competitive, capital-hungry tech market.

With its valued reputation in the TEM and MMS sectors, Falcon has been pivotal in offering sell-side and strategic advisory services to middle and lower middle market companies since 2001. Leveraging deep sector expertise in areas such as healthcare, technology, and business & financial services, Falcon focuses on more than just facilitating transactions; leveraging its experience as former operators and using strategic advisory frameworks, it emphasizes the maximization of shareholder value, building trusted relationships and the delivery of measurable success for its clients.