May 13, 2025 - We polled 1,000 senior leaders of privately held companies spanning industry sectors across the nation to take stock of actions, concerns, and challenges in key areas including creating future value. Our 2025 Private Company Performance Report sheds light on the growth trends and challenges reported by our survey respondents.

Our respondents report that:

• 59% launched new products or services to create value in the past three years.
• 58% expect to invest in technology including smart infrastructure, cloud computing, edge computing, and AI in the next two years.
• Half of businesses indicate the potential sale of their business in the next 3 years.
• 67% of businesses expect economic improvement over the next 12 months.
• 44% say tech investments are most critical to company success in the next two years.
• Top ways to maximize company value for a potential sale include the ability to report profitability by product/service (34%) and organization structure/talent (32%).

Value Creation Through Innovation: Past Actions, Future Intentions

The top two actions private companies have taken in the past three years to create value are the launching of new products and services (59%) and the extension of operations to new territories (52%). Other actions of note with high response rates are the forming of strategic alliances, engaging in mergers and acquisitions, and outsourcing of functions to third parties. The most common future value creation investments foreseen in the next two years involve technology and, as we saw earlier in our report, the workforce’s upskilling efforts that go hand in hand with technological advancements.

75% of respondents expect economic conditions to improve over the next 12 months. Importantly, some of the drivers are things leaders can affect, like productivity through technological investments. Others are out of their control, like the regulatory environment.

Mergers & Acquisitions and Maximizing Company Value for a Transaction

With half of our private company respondents saying they are definitely or probably considering the sale of their business, it is interesting to note what they believe will drive company value for a potential sale. Whether or not they are considering a sale, leaders say these areas require upgrading to maximize value.

Focus on Value Creation

Value creation is about increasing the overall value of a product, service, or business through the use of technology, innovation, alliances, improved processes, new product or service offerings, and/or mergers and acquisitions.

Working with our clients who are building their businesses and looking to create value, whether to sell their business, position themselves to buy a business or increase the overall value of their investments gives us a unique perspective on how this value is created. Value creation is an investment that can have major returns if executed well. Historically, we have seen our clients invest in growing new territories as a growth strategy, especially for smaller companies, whereas larger corporations have relied on mergers and acquisitions to create synergistic value.

With the shortage of financial operating professionals – post pandemic, outsourcing of the finance function for many industries has led to improved value, especially in the financial services, real estate, and technology sectors. For the manufacturers and distributors, introducing new products to attract and retain customers has been critical to sustain and create value.

Looking to the future, clients are focusing on leveraging technology in an even more intentional way than ever before to create and grow value for their businesses, employees, customers and clients.

Our largest clients are still very focused on mergers and acquisitions but intend to use technology, including AI solutions, to improve and create value for their shareholders and investors. Whereas using mergers and acquisitions to create value is less of a strategy for lower/middle market firms. Technology efficiencies and tools are the single largest investment trend for middle market and small companies. This is across all industries and geographies. Improving talent and personnel skillsets is also a focus of our clients to create more value by leveraging their human capital more effectively.

Exit Plans

Half of the companies surveyed (50%) are actively considering an exit in the next three years, with 30% leaning towards “probably” and 20% “definitely” considering it. In contrast, 49% of companies indicated they are “probably” or “definitely” not seeking a liquidity event. The percentage of companies looking to sell in the near term has increased compared to our previous year’s survey, which aligns with the current market dynamics. This trend makes sense given the limited M&A activity in 2023, with a modest rebound in deal flow for small to midsize enterprises (SMEs) in 2024. Looking ahead, M&A activity is expected to gain further momentum in 2025, creating more opportunities for businesses looking to exit or explore strategic transactions.

Private equity (PE) firms have largely remained on the sidelines over the past two years, choosing to hold onto their portfolio companies for extended periods to maximize returns. This shift has contributed to the overall slowdown in M&A activity across the US. In response to this extended holding pattern, PE firms have increasingly turned to continuation funds over the past five years, allowing them to acquire companies within their existing portfolios and prolong the traditional 3-5 year hold period. This strategy has further influenced the M&A landscape, creating a more cautious and patient approach to deal-making in the current market.

According to our survey, companies considering a potential sale are focused on maximizing value by refining key operational areas. A significant 34% of respondents highlighted the importance of having the ability to report profitability by product and/or service, while 32% emphasized enhancing their organizational structure and talent. Enhancing financial reporting ranked as the third most critical factor, with 30% of respondents identifying it as a priority. From our experience with small to midsize enterprises (SMEs), investing in robust financial reporting and key performance indicator (KPI) production is one of the most impactful actions a new management team can take. Not only does it provide deeper insights into the profitability of various business segments, but it also enhances transparency and decision-making, which can ultimately unlock greater value during a potential transaction. Effective financial reporting serves as a critical tool for showcasing the company’s performance and growth potential, making it a key driver in attracting interested buyers and achieving a successful sale.

Finding the right talent to execute a strategy is also crucial, but the importance of this factor can vary depending on the nature of the future acquirer. For strategic buyers, there may be less emphasis on retaining the existing management team, as their focus could be on integrating the business into their larger operations and leveraging their own leadership resources. In contrast, a larger privately held or family-owned company, which has traditionally relied on a single owner to oversee every aspect of the business, will face a different set of challenges. In these cases, it’s essential to demonstrate that the company has a strong, capable management team in place—one that can successfully lead the business post-acquisition and execute a growth plan once the owner exits. The ability to show that the company can continue to thrive and grow under new leadership is often a key factor in securing the right buyer and achieving a smooth transition.

Citrin Cooperman’s Private Company Performance Report

Creating future value is top of mind for business leaders, and Citrin Cooperman is equipped with the knowledge and insights to help your company achieve its goals. Citrin Cooperman has been serving and advising middle-market, private companies and high net worth individuals for over 40 years and created an annual Private Company Performance Report to discuss what is top of mind for business leaders across the country. Access our report to discover valuable insights into the trends, opportunities, and challenges facing businesses today.

Access the 2025 Private Company Performance Report