The Argos Index®, a key measure of mid-market company valuations in Europe, dropped 3 percent in the first quarter of 2025 to 9.5x EBITDA, reversing the modest recovery seen in 2024.
The decline reflects a sharp slowdown in mergers and acquisitions (M&A) activity. Deal volume fell 20 percent and disclosed transaction value dropped 35 percent compared to Q4 2024.
The downturn is widely attributed to mounting economic uncertainty driven by concerns over U.S. President Donald Trump's trade and economic policies, which have rattled global markets and investor confidence.
Valuations declined across both the lower and upper mid-market segments, affecting transactions by both strategic buyers and private equity funds. Strategic buyers paid slightly lower multiples at 9.2x EBITDA, while investment funds saw a 3 percent decline to 10.0x EBITDA, despite improved financing conditions.
While inflation is nearing the European Central Bank’s 2 percent target and interest rate cuts are anticipated, these favorable financial trends were not enough to offset the broader unease. The market is showing signs of normalization, with extreme transaction multiples now at their lowest level since the COVID-19 pandemic.
Mid-market M&A activity in the eurozone returned to early 2023 levels, mirroring a global decline. Q1 2025 marked the weakest quarter for global M&A in over a decade, with deal numbers down 30 percent year-on-year and 44 percebt below the 2021 peak.
The outlook for the M&A market remains uncertain, with recovery hinging on political stability and clearer economic policy direction from the U.S. administration.
