More than Just Numbers: The Role of Commercial Due Diligence in the Success of Mid-Market M&A Transactions
JAKARTA - Global mid-market transaction activity is expected to decline by 2025 due to increased geopolitical tensions and trade tariff uncertainties. However, a number of pending transactions are still in the pipeline as investors choose to wait for more conducive conditions.
Mid-Market Remains Resilient Amid Market ComplexityAccording to BDO's M&A Horizons 2026 report, the decline in global mid-market transaction activity in 2025 was also influenced by limited strategic planning horizons amid economic uncertainty. However, this condition does not fully reflect a permanent slowdown. Many business owners and investors still maintain their transaction plans and choose to wait for a more stable market momentum before proceeding with the deal.
In the Asia Pacific region, mid-market transactions are increasingly becoming the main focus of private equity activities. Investors tend to prioritize smaller-scale transactions that focus on operational improvements compared to large acquisitions. In Southeast Asia, private equity recorded investments of around 9.1 billion US dollars through 59 transactions in 2025, reflecting an increasingly selective investment environment. Indonesia itself remains an active M&A market with a value of around 6.2 billion US dollars from 102 transactions, showing investors' continued interest even though capital placement is carried out more carefully.
Consumer growth and accelerated digital adoption continue to attract both domestic and international investors. On the other hand, sectoral factors such as consolidation in financial services, as well as increased interest in the technology, manufacturing, and sustainable energy sectors also drive transaction activity.
Marvin Camangeg, Partner (Advisory) BDO in Indonesia, assessed that in the future, investors will increasingly demand higher due diligence criteria and more creative transaction structures. If global trading conditions become clearer, transaction flows are expected to increase again, albeit with stricter levels of selectivity.
Reliable Performance and Commercial SustainabilityConventionally, the finalization of financial, tax, and legal aspects focuses on verifying the company's past condition. This process answers the important question: is the information provided to investors accurate and reliable?
However, investors ultimately 'buy' the potential of the future, not just historical performance. A company can have good financial statements, but in reality it still faces the risk of a declining market, the potential for a declining number of customers, or changes in competition that are not visible from the financial statements alone. This is where commercial due diligence becomes an important component in investment decision-making.
"Ensuring the reliability of historical performance is important, but assessing whether the underlying market is able to support future growth is equally important. In M&A transactions, the greatest value often comes from the ability to identify how market dynamics can open up expansion opportunities beyond current performance," said Marvin Camangeg, Partner (Advisory) BDO in Indonesia.
"This is increasingly relevant in Indonesia, where the acceleration of digital adoption, changes in consumer behavior, and regulatory developments require companies to ensure business strategies that can maintain long-term growth. Comprehensive investment evaluations usually combine financial analysis with commercial analysis to provide a more complete picture of business prospects," added Marvin Camangeg.
In addition to assessing historical performance, commercial due diligence also analyzes various external factors such as market conditions, growth potential, industry trends, competitive conditions, and customer demand stability. This analysis helps ensure that growth projections in the business plan are truly realistic and supported by market conditions. Why Market Analysis is Increasingly Important in M&A
Amid increasing industry disruption, investors are now facing greater pressure to validate the market conditions behind each transaction. Digitalization, global supply chain changes, and shifts in consumer behavior shorten the life cycle of traditional business models.
At the same time, company valuations are increasingly dependent on future growth projections, especially in the technology and digital sectors. This has the potential that if there is an error in the market assumption it can carry significant risks.
For foreign investors entering Indonesia, the complexity of local dynamics, regulations, and competition levels also adds its own challenges. In this context, independent market validation is an important step to ensure more informative investment decisions.
Case Study: Manufacturing Acquisition Targets in IndonesiaIn one of the evaluations of manufacturing transactions in Indonesia, foreign investors found stable financial performance and healthy margins. However, through commercial due diligence, it was revealed that the business is highly dependent on a small number of customers and the actual order volume is more volatile than the revenue trend. Market analysis also shows overly optimistic growth projections. These findings help investors adjust valuations and develop a more realistic post-acquisition strategy.
From Due Diligence to Deal ConfidenceSuccessful acquisitions require more than just verified financial statements. Investors also need to understand whether the company's business model is truly sustainable and whether market conditions support the growth expectations that underlie the valuation of the transaction.
Experience shows that transactions that create long-term value are generally those where the commercial questions have been clearly answered before the deal is signed. With the increasing standards of due diligence, investors who integrate commercial analysis into the evaluation process will be in a stronger position to capture long-term value opportunities in the growing Southeast Asian mid-market.