Industry Trends
Overall M&A transaction volume in the Industrials Industry remained robust in Q4 2025, despite less overall activity compared to Q3. Capital investment continues to surge, reflecting investor confidence and strategic consolidation within the sector.
Technological investment, particularly in AI and automation, along with evolving U.S. regulatory and trade policies, are driving growth in the industry, creating new market dynamics and collaboration opportunities.
Additionally, private equity is likely to contribute to a rise in M&A activity, as capital deployment from financial sponsors increases and strategic buyers pursue quality assets despite market volatility.
Market Dynamics
- Q4 experienced mixed performance across market segments as Industrial companies navigate through tariff impacts, reshoring initiatives, digital transformation, labor shortages, and AI integration.
- The Aerospace & Defense sector continues to perform strongly with both the highest sub-sector overall valuation (20.3x EV/EBITDA) as well as the largest increase in YoY multiple appreciation (+12.7%). Sector performance is driven primarily by robust defense budgets, modernization programs, and ongoing geopolitical tensions; leading defense spending to outperform broader markets during the period.
- The Contract Manufacturing sector continues recovering from trade uncertainties and tariff impacts, with stable multiple growth since the second quarter of the year (+9.9% YTD).
- The Transportation & Logistics index value increased by 12.1% in Q4, the largest quarterly increase between the sectors. This increase was driven primarily by stabilizing freight volumes across trucking, intermodal, and parcel while contract pricing has proved more resilient than expected.
Sources: Capital IQ as of 12/26/2025. Reuters, Simon-Kucher, PwC, Deloitte, Advanced Technology Services, DAT Freight & Analytics
Learn More
Reach out to Dinan Capital Advisors Managing Director Tom Gerlacher for more report insights.
