Investors Become More Selective, Commercial Due Diligence Becomes Compass for Mid-Market Transactions
Global mid-market transaction volumes have slowed throughout 2025. Geopolitical tensions and trade tariff uncertainty have prompted many investors to hold back. However, this pause does not signal a loss of market momentum.
BDO’s M&A Horizons 2026 report indicates that numerous transactions remain in the pipeline. Amidst compressed planning horizons due to economic uncertainty, many business owners and investors continue to maintain acquisition plans whilst awaiting more stable market momentum to execute deals.
In the Asia-Pacific region, mid-market transactions are increasingly becoming the focus of private equity investors. They tend to favour smaller-sized transactions oriented towards improving operational performance. In Southeast Asia, private equity recorded investments of approximately US$9.1 billion through 59 transactions throughout 2025.
Indonesia continues to demonstrate substantial transaction activity. Transaction values reached approximately US$6.2 billion from 102 transactions, reflecting strong investor interest despite increasingly selective approaches. Growth in the consumer class, accelerating digitalisation, and opportunities in financial services, technology, manufacturing, and sustainable energy sectors continue to drive investment activity.
According to Marvin Camangeg, Partner (Advisory) at BDO Indonesia, investors will increasingly demand higher due diligence standards and more creative transaction structures going forward. He also anticipates that transaction flows will resume growth if global trade conditions become clearer, albeit with stricter selectivity levels.
Conventionally, due diligence processes on financial, tax, and legal aspects typically focus on verifying a company’s historical performance. However, what investors actually purchase is not merely a record of the past, but the future potential of the business.
A company may have solid financial statements yet still face market risks such as customer decline or changes in competitive dynamics. For this reason, commercial due diligence has become increasingly important for comprehensively assessing business growth prospects.
Marvin emphasises that besides ensuring reliability of historical performance, investors must also assess whether the market can sustain the company’s future growth.
“Amid accelerating digitalisation and changing consumer behaviour in Indonesia, investment evaluation ideally combines financial and commercial analysis so that business prospects appear more complete,” Marvin stated.
Beyond verifying historical performance, commercial due diligence also assesses market conditions, growth potential, industry trends, competition levels, and demand stability to ensure the business projections presented by the company are genuinely realistic.
Amid digital disruption and changing consumer behaviour, investors are required to be increasingly careful in validating markets. This is critical because company valuations currently often rest on future growth projections. For foreign investors in Indonesia, the complexity of local dynamics and regulation makes independent market validation an important factor in investment decision-making.
For example, in evaluating a transaction in Indonesia’s manufacturing sector, a foreign investor initially saw the company’s stable financial performance with healthy margins. However, commercial due diligence results revealed dependence on a handful of customers, fluctuating order volumes, and overly optimistic market projections. These findings ultimately necessitated adjustments to valuation and post-acquisition strategy.
This case confirms that acquisition decisions cannot rely solely on verified financial reports. Investors must also assess the sustainability of the business model and the market strength supporting the company’s growth.
As due diligence standards increase, the integration of commercial analysis is becoming increasingly important for capturing long-term value in mid-market transactions across Southeast Asia.