Despite nationwide economic uncertainty and a slower-than-expected rebound in mergers and acquisitions (M&A) activity in 2025, Chicago’s dealmakers are outperforming their national counterparts. While high borrowing costs and market volatility have generally muted business combinations, the Windy City’s deal volume remains robust, providing a beacon of optimism for the broader U.S. marketplace.

Chicago Outpaces National M&A Trends

According to recent data from PitchBook, the Chicago metro region announced 318 deals by the end of August 2025, registering only a 1.2% decrease compared to the same period in 2024. In stark contrast, the national figure dipped 9.9% year-over-year, dropping from 10,462 to 9,425 announced deals. The local resilience stands out at a time when deal activity in the rest of the country continues to struggle amid continuing macroeconomic headwinds, geopolitical tensions, and an uncertain regulatory climate.

In September alone, Chicago saw an additional 12 local transactions for a monthly total of 64, outpacing its own past performance, while nationally, deal figures lagged behind. For context, PitchBook reported 52 Chicago-area deals and 1,301 nationwide deals in September 2024, indicating Chicago’s market share is expanding even as overall volumes remain suppressed.

Marquee Deals and Private Equity’s Influence

Headline-grabbing transactions have played a role in lifting Chicago’s M&A profile in 2025. One of the most significant moves was the $10 billion sale of Walgreens Boots Alliance to Sycamore Partners, a New York-based private equity firm. This take-private deal, finalized in late August, exemplifies both the scale and boldness that area dealmakers are bringing to the table.

Chicago’s private equity sector, in particular, is providing considerable momentum. Regional firms executed 206 local deals through August—up from 189 a year prior—demonstrating renewed willingness to deploy capital that had accumulated during the slower dealmaking years of the pandemic and early inflation surge. Analysts estimate that North American private equity funds collectively continue to hold about $2 trillion in unspent capital, or “dry powder,” much of it earmarked for acquisitions and buyouts.

Thoma Bravo, Chicago’s most prominent private equity powerhouse, made headlines itself with a $12.3 billion acquisition of Dayforce, the HR software provider, representing the firm’s largest-ever transaction. In quick succession, Thoma Bravo followed up with a $2 billion purchase of Verint, an AI-driven customer experience software maker, showcasing the firm’s appetite and capacity for large, transformative technology investments.

Meanwhile, GTCR, another Chicago stalwart, secured a landmark $4.8 billion purchase of Zentiva Group AS, a leading generic drug manufacturer, further bolstering Chicago’s standing as a driving force in high-profile U.S. M&A transactions.

Drivers of Chicago’s Dealmaking Momentum

Several factors underpin Chicago’s strong dealmaking position in 2025:

• Robust Capital Reserves: Private equity funds, flush from years of fundraising, are under pressure to deploy assets or return capital to investors. This imperative is sparking competition for quality companies even as broader markets remain hesitant.
• Sector Specialization: Dealmakers are targeting sectors with future-proof characteristics, particularly technology, business services, power systems, data centers, and artificial intelligence. Companies like RESA Power and Shermco, both serving critical infrastructure and AI adjacent markets, have drawn intense buyer interest.
• Selectivity and Quality Focus: Amid persistent economic uncertainty, acquirers are discerning, with multiple bidders gravitating toward “best-in-class” companies with strong balance sheets. Conversely, non-premium companies are largely overlooked unless they offer truly unique value or strategic fit.

Tim Shea, partner and head of business services at Solomon Partners, noted, “These funds that have been raised, they have to be put to work, or the money needs to be returned, and so they are getting put to work.”

Challenges: Economic Uncertainty and Valuation Gaps

Despite healthy activity relative to other regions, challenges persist. While optimism spiked early in 2025 following President Donald Trump’s return to office—and his reputation for favoring looser regulations—those hopes were tempered by the administration’s decision to maintain strict antitrust guidelines and to announce new tariffs in April.

This reversal of expectations led to renewed caution, especially among buyers, who scrutinized potential acquisitions more closely than ever. With interest rates remaining stubbornly high for most of 2025 (the U.S. Federal Reserve delivered its first rate cut only in late Q3), and with supply chains periodically disrupted by geopolitical and trade disputes, many bidders pulled back or parceled out their investments only to the most highly valued assets.

A notable headwind in the current market is the “seller hangover” described by Cardone Ventures CEO Brandon Dawson—many private owners have unrealistic expectations based on peak market valuations from five years prior. The resulting valuation gap between buyers and sellers continues to stifle the volume of completed deals, especially for mid-market companies that lack the scale and negotiating leverage of larger peers.

“You have a seller hangover, which people think they are worth a lot more than they are, and they are hoping the market comes back,” Dawson said. “So, you just have this huge gap between buyers and sellers.”

A recent PitchBook report noted that middle-market companies are more likely to pursue liquidity, capital infusions, or partnerships with private equity buyers during periods of heightened uncertainty, especially given their more limited resources and vulnerability to external shocks.

Looking Ahead: Expectations for 2026

There is mounting optimism that dealmaking will accelerate heading into 2026. The Federal Reserve’s recent rate cuts are expected to revive financing activity and lower the cost of capital for buyouts and acquisitions. With over 4,000 mature portfolio companies in U.S. private equity funds (having been held at least five years), a wave of exits and new deals is anticipated as firms look to realize returns and recycle capital.

Industry leaders suggest that as more landmark transactions close in Chicago, deal confidence grows, enticing hesitant investors to seize the next opportunity. Tim Shea noted, “I think seeing other people make these bets makes the next private equity firm feel better about it. If they missed out on one of these, they are going to go after the next one.”

As dry powder levels remain historically high and regulatory/political clarity slowly improves, Chicago’s dynamic dealmaking environment is poised to set the pace for national recovery, further cementing its reputation as a premier hub for mergers and acquisitions in North America.