For years, growth was the golden ticket to securing a premium business valuation. Companies that could show double-digit top-line expansion often commanded high multiples, even if the foundations of their operations were shaky. But business valuation in 2025 looks very different.
After two cautious years, optimism is returning to mergers and acquisitions. Deloitte’s 2025 M&A Trends Survey found that nearly two-thirds of dealmakers expect activity to increase, with both corporate buyers and private equity firms forecasting larger deal sizes. But this revival comes with a critical caveat: investors are demanding operational resilience in M&A, not just revenue growth.
“That was nice, but those days are over.”
Private Equity Investment Trends in 2025
Private equity investment trends reveal a clear shift. Buyers now scrutinise the systems behind the numbers. Why? Because growth supported by fragmented processes, outdated tools, or over-reliance on individuals is fragile. Investors want assurance that performance is repeatable — and that the company will thrive post-transaction, even if key executives step away.
This is why digital transformation and investor confidence are increasingly linked. McKinsey’s research shows that digital and AI leaders outperform laggards by 2–6x in five-year shareholder returns. Integrated systems reduce reliance on individuals, improve decision-making speed, and provide a single source of truth for performance.
And just as choosing the right first AI project can determine whether transformation sticks or stalls, selecting the right core systems sends investors a clear signal of resilience.
Why System Choices Matter in Business Valuation
Predictability over Heroics
Investors reward repeatability, not heroics. A company stitched together with spreadsheets, emails, and chat logs may function day to day, but in diligence, that fragility is exposed.
An integrated CRM or ERP provides visibility across sales, billing, operations, and reporting. This continuity strengthens investor confidence and directly improves valuation multiples.
Professional Services — A Case of Key Person Risk
In professional services, the problem often shows up in resource planning and billing. Many firms still rely on spreadsheets managed by a handful of senior staff. During diligence, buyers discover that profitability analysis requires conversations with one or two individuals who “know how the numbers work.”
Valuation expert Aswath Damodaran calls this the key-person discount:
“Can one person make a difference to the value of a business? Of course…”
This illustrates the risk of key person risk in business valuation. Buyers will either reduce their offer or require post-deal investment in modern systems.
By contrast, firms that invest early to streamline their sales process with automation can demonstrate scalability and resilience — earning stronger multiples.
Spreadsheet Risk in Business Processes
The spreadsheet risk in business processes is real. Auditors and professional bodies like the ICAEW have long warned that unmanaged spreadsheets are error-prone, hard to audit, and risky when they underpin core business activity. In diligence, these risks translate into longer audits, tougher deal terms, or lower offers.
We will explore this theme in more detail in a future Blog: The Spreadsheet Discount, but the message is clear: businesses that run on spreadsheet glue face hidden valuation penalties.
Digital Transformation and Investor Confidence
From Fragility to Resilience
To a founder, being indispensable may feel like a badge of honour. To an investor, it’s a liability. Dependency on individuals, siloed spreadsheets, or outdated processes adds risk.
Investors increasingly see digital transformation and investor confidence as inseparable. Businesses that run on unified platforms are easier to audit, simpler to integrate post-acquisition, and more scalable. They embody the operational resilience in M&A that buyers now demand.
A Glimpse Ahead — Beyond Professional Services
The same principles apply across industries. In Contract Research Organisations (CROs), regulators demand auditable, systemised data. As we explored in our article on modern unit planning and billing in CROs, moving away from fragmented processes improves compliance and efficiency — both critical to valuation integrity.
In manufacturing and distribution, visibility into inventory and supply chains has become a valuation driver. These sectors demonstrate how system choices are valuation choices — a theme we’ll unpack further in future Blog posts.
The Bottom Line
Valuation in 2025 is no longer dictated by revenue growth alone. Private equity investment trends show that investors now prioritise resilience, scalability, and independence from key individuals. Those qualities are revealed in system maturity.
Businesses that choose to modernise with integrated platforms demonstrate repeatability, reduce key person risk in business valuation, and eliminate the spreadsheet risk in business processes that erode multiples. In today’s market, system choices directly shape valuation outcomes.