Tariff Policy Uncertainty Limited M&A Activity in 2025, Activity Will Likely Increase Modestly in 2026

The economic conditions and business confidence in place at the outset of 2025 suggested that the equipment finance industry should expect a robust improvement in M&A transaction activity throughout the year. M&A activity had been anemic for the previous three years, due in large part to elevated interest rates driven by the Federal Reserve’s federal funds rate policies enacted to battle record-high inflation. The Fed’s actions resulted in seven rate increases during 2022, followed by four more increases in 2023, increasing the target rate range
from 0–25 basis points (bps) to a 21-year
record-high range of 5.25–5.50 bps. Starting in September 2024, the Fed began a series of three rate cuts that would result in a 100-basis-point drop, bringing the target range to 4.25-4.50 bps at the end of 2024, signaling that the Central Bank believed that inflation was under control and the soft landing was being achieved.

In addition to the lower interest rate environment, there were other reasons to be optimistic that 2025 would provide for a more favorable M&A environment than in past years. Industry confidence was high at the start of 2025, with the Equipment Leasing and Finance Foundation reporting that the Monthly Confidence Index for the equipment finance industry increased to 69.6 in January 2025, up sharply from 48.6 in January 2024 and 48.5 in January 2023. The stock market was setting record highs, with the S&P 500 closing over 6,100 in late January. Unemployment was relatively low at roughly 4.0% in January, adding to the confidence that 2025 was setting the stage for a successful M&A environment. In addition to the strong stock market, low unemployment and the highest business confidence levels in the past three and a half years, the uncertainty surrounding the 2024 presidential election was behind us. The new administration’s campaign ran on the promise of promoting a more business-friendly environment through reduced regulations, lower corporate tax rates and reduced pricing for goods and services driven by a more robust energy policy. 

Then, in a true black-swan moment, punitive tariffs on China, Mexico and Canada were announced in February 2025, catching everyone off guard. After a series of announcements and subsequent delays, a more formal announcement was made on April 2, 2025, commonly known as Liberation Day, to expand the scope of countries subject to U.S. tariffs. Uncertainty and chaos ensued, the stock market plunged and businesses refocused their efforts to assess the potential impact these tariffs might have on their raw-materials costs, supply chains and future product demand, essentially creating sufficient uncertainty to dampen enthusiasm for M&A activity throughout the remainder of the year.

Notable Recent Transactions

Despite the challenging M&A environment, a handful of notable equipment finance transactions occurred throughout 2025. In January, Lake Oswego, OR-based Dext Capital announced that it had agreed to acquire Minneapolis-based Honour Capital’s equipment finance team along with a relatively small portfolio. According to the press release, the acquisition provided Dext with an opportunity to expand its direct business model, while the Honour team benefited from a more stable source of capital and improved customer service and support. Honour Capital’s agricultural lending unit, which was established in 2024, was excluded from the sale. 

In April, Norwalk, CT-based North Mill Equipment Finance announced that it had closed on its acquisition of Pawnee Leasing Corporation from an affiliate of Chesswood Group Limited. The transaction was subject to a court-supervised sale and investment solicitation process and approval from the U.S. Bankruptcy Court for the District of Delaware. North Mill and Pawnee both focus primarily on a third-party origination model. North Mill’s senior leadership noted that they had modeled several elements of their market strategy on Pawnee’s business models, citing their long-term success. 

Founded in 2008, Draper, UT-based Onset Financial acquired Channel and its subsidiaries in April, merging two of the largest independent equipment finance companies. Channel’s business model centers on a strong technology platform that delivers equipment financing and working capital solutions to small businesses, while Onset focuses primarily on larger equipment finance transactions through customized deal structuring. Both organizations share a common vision of customer focus, deep industry relationships and employee success.

Two months later, in June, PEAC Solutions, a portfolio company of HPS Investment Partners, announced that it had signed a definitive merger agreement with Herndon, VA-based ePlus to acquire the domestic subsidiaries of ePlus that comprise the company’s U.S. financing business. ePlus provides technology solutions and services to customers, including artificial intelligence, security and cloud and data services. According to the press release, the merger provides ePlus with incremental capital to invest in growth and acquisition opportunities in the technology and services space, while it enables PEAC to expand its equipment leasing and finance technology solutions to the United States’ federal, state and local government sectors. According to SEC filings, ePlus received an initial cash payment of approximately $180 million, which represented the book value of the portfolio assets plus a premium of approximately $2.4 million, less unpaid transaction fees. The transaction was further subject to potential earn-out payments, based on the achievement of certain volume and profitability targets.

A number of service providers in the equipment finance and leasing industry merged in 2025 to expand their service offerings and increase their customer base or gain market share from existing customers. In June, Concord Servicing, a Scottsdale, AZ-based leading provider of specialized portfolio servicing solutions, acquired Gig Harbor, WA-based Orion First. Concord serves originators and investors in specialty credit, including payment processing, loan administration, default management and data analytics and reporting across a wide range of asset classes and product types for consumer loans. Orion First, by contrast, provided third-party portfolio management and analytics to the commercial equipment finance industry. GTCR, a Chicago, IL-based private equity firm that acquired Concord Servicing in December 2024, facilitated the merger of the two companies, thereby expanding service offerings across both consumer and commercial markets. In addition to the combined offering, the merger also creates significant scale through technology–driven solutions and expanded geographic reach beyond the U.S. into Mexico and Canada. 

Minneapolis, MN-based Solifi announced the acquisition of Leasepath, a middle-market provider of global equipment finance lease and loan management technology. According to the announcement, the merger expanded Leasepath’s target markets to include EMEA and APAC, while also creating growth opportunities for Solifi to expand its middle-market solution. In September, Solifi announced that it would expand its automobile wholesale finance and inventory risk management service offerings with its acquisition of DataScan. The company, founded in 1989 and headquartered in Alpharetta, GA, serves a client list of over 45 banks and captive lenders.

In September, San Diego, CA-based Axos Bank announced the acquisition of Verdant Commercial Capital. Verdant, founded in 2017 and headquartered in Cincinnati, OH,  is a small- and mid-ticket finance company focused on the vendor origination channel. According to the press release, Verdant had approximately $1.1 billion in portfolio assets, including approximately $750 million of on-balance sheet securitized assets and $350 million of loans and leases. The initial purchase price for the company was $43.5 million, which included a 10% premium to book value paid in cash at closing. Verdant can also earn up to an additional $50 million, subject to the achievement of certain performance targets over the next four years through an earn-out clause. 

In November of 2025, Midland States Bank sold most of its equipment finance portfolio to an affiliate of North Mill Equipment Finance. The bank’s equipment finance portfolio consisted of approximately $620 million in leases and loans, including $21 million in operating leases prior to the sale. The bank retained approximately $75 million of leases and loans and sold the remaining $545 million to North Mill for $502 million in cash. The bank announced earlier in the year that it had ceased funding new business at the end of September 2025. According to the press release, the bank anticipates recording a loss of approximately $20 million on the sale, including transaction expenses.

Also in November, SLIM Capital acquired Capital Finance Solutions. Both organizations are California-based equipment finance companies specializing in vendor and end-user origination models. The acquisition allows SLIM to widen its vendor base and expand its direct origination capabilities. 

The Current Market

Despite the uncertainty and confusion created by the tariffs, the equipment finance and leasing industry is currently performing very well and industry confidence is on the rebound. Many economic conditions currently support a vibrant M&A environment, including a stock market that continues to set record highs, a relatively low unemployment rate, a favorable tax and regulatory environment and improving business confidence in our industry. 

Industry performance remained strong in 2025, and several companies reported record-high originations and profitability for the year. In fact, the Equipment Leasing and Finance Association recently reported in the CapEx Finance Index that year-to-date new business volume for 2025 reached the all-time second-highest level at $119.8 billion, just shy of the record high set in 2024. Supporting this solid industry performance, portfolio quality remained impressive, with the Index reporting that receivables over 30 days stood at 2.0% in December 2025, consistent with the measurement in December 2024 and lower than the 2.3% reported in December 2023. 

This impressive industry performance led to a sharp increase in business confidence among key industry executives. The February 2026 monthly confidence index, as reported by the Equipment Leasing and Finance Association, increased to 67.6, up from 58.3 in December 2025. This index, which is designed to reflect a qualitative assessment of industry leaders’ perceptions of current and future business conditions, has not seen the current confidence levels since January of 2025, suggesting that 2026 may be a more robust year for M&A activity in the industry.

Potential Headwinds

Despite strong industry performance and an improving economic environment, there are still a number of factors that might challenge the M&A market in 2026. Geopolitical issues remain prevalent and can affect the U.S. economy. The Russia-Ukraine war has been ongoing since February 2022, and despite ongoing negotiations, it is not likely to end anytime soon. Tensions in the Middle East remain high, and the United States continues to support a possible regime change in Iran, Venezuela and Cuba, all of which can impact the United States’ economic conditions, energy policies, pricing and supply chains. 

Tariffs have become a significant component of the U.S. economy. The Supreme Court recently found that the President exceeded his authority to impose the 2025 tariffs under the International Emergency Economic Powers Act. Given the importance of tariffs to his economic policy, the President is seeking alternative trade laws that might support his authority to impose and enforce import tariffs. This setback continues to cast uncertainty on the enforceability of tariffs and further opens up the possibility that some countries may need to have previously paid tariffs refunded, creating additional uncertainty in the market and potentially reducing M&A activity.

The uncertainty associated with the 2026 mid-term elections will soon be upon us. Any shift in the balance of power in either the House or the Senate could impact economic policy and the regulatory environment, and, in turn, influence the level of M&A activity.

Possible Opportunities

The current administration has been openly disappointed in the magnitude and frequency of Federal Reserve rate cuts and hopes to replace Jerome Powell, the current chair, when his term expires in May 2026. A more aggressive rate-cut policy would impact the economy significantly, including the level of M&A activity. When interest rates fall, potential acquirers have a lower cost of funds and can afford to pay higher prices for target companies, which generally results in more opportunities for successful transactions. In addition, sellers who hold fixed-rate portfolios where most of the originations took place during a higher interest rate environment will benefit from higher net interest margins and profitability against floating rate debt costs. 

There seems to be increased interest in M&A activity from large strategic finance companies looking to expand their current market offerings through lift-out teams or boutique equipment finance platforms with experience in specific equipment markets, financial markets or ticket sizes. The goal of these strategic firms is to acquire the skills necessary to succeed in these new markets rather than investing the time and resources needed to grow the business organically.

Banks also appear to have a renewed interest in the equipment finance and leasing space. These banks see the industry as a way to diversify their revenue sources, attract and retain customers and provide their investor base with an above-average, risk-adjusted, market return. Since banks generally operate with a lower cost of funds, they can typically provide a seller with a more compelling offer than private equity and strategic finance company bidders.

Conclusion

The Alta Group has reason to expect that 2026 will be a more favorable year for M&A activity. Several companies are currently being offered for sale or are considering a sale in the near future. We are also hearing from qualified buyers that they are interested in acquiring quality target companies that will strategically help them grow and expand. While 2025 M&A activity was hampered largely by economic uncertainty and tariffs, buyers in 2026 are opportunistically interested in acquisitions to grow their businesses. •

James (Jim) Jackson is co-CEO of The Alta Group and leader of its Merger and Acquisition Advisory Practice. Alta’s M&A practice provides buy-side and sell-side advisory services, locates debt and equity financing, provides valuations and performs other related services to the equipment finance industry. Jackson has over 35 years of experience in the equipment leasing and finance industry and has served as a senior financial executive at MicroFinancial/TimePayment, Deutsche Financial Services, AT&T Capital Corporation – Leasing Services and Signal Capital Corporation. He is a past president of the National Equipment Finance Association and can be reached at jjackson@thealtagroup.com.