Across North America’s home furnishings industry, dealmakers are sitting on their hands as tariff uncertainty, elevated interest rates, and a sluggish housing market weigh on activity.

Companies that do come to market are still commanding premium valuations, signaling a shift toward quality over quantity, investment bankers and advisors said.

Average EBITDA multiples remain in the mid-to-high teens, reflecting a market where only the strongest businesses are willing — or able — to test buyer appetite.

“The convergence of reduced deal flow and elevated multiples underscores a fundamental shift,” said Alex Chefetz, managing director covering consumer at CriticalPoint. “The market is aggressively rewarding resilience and differentiation.”

Buyers are pursuing fewer targets but paying up for companies with distinctive brands, strong digital channels or supply chains less exposed to tariffs. With imports accounting for roughly two-thirds of furniture sold in the US, businesses with domestic manufacturing or service components are drawing outsized interest, Chefetz said.

Mergermarket data shows that deal count peaked in 2Q25, when President Donald Trump made his Liberation Day announcement, but had fallen by half by 4Q25.

Source: Mergermarket, data correct as at 02-Apr-2026

Sticker shock slows sales

Tariffs and supply chain disruption are central to the slowdown. Home furnishings companies have raised prices to offset higher import costs.

“Consumers have not responded well to this price increase and have postponed purchases, waiting for better times,” Chefetz said.

That has pressured revenue and profitability, making buyers less confident and prompting sellers to delay processes until performance improves.

Tariffs are also complicating deal execution. “Tariff unpredictability is making it hard to confidently diligence the cost of goods sold and EBITDA,” said Joshua Freeman, founding partner at Freeman Lovell. “Global conflict and foreign relations are complicating supply chain reliability and costs.”

As a result, deals that once took about six months are now taking closer to a year, Chefetz said, as buyers factor in shifting trade policy and geopolitical risk.

LBOs put on the couch

Interest rates are another major drag. Higher borrowing costs have slowed leveraged buyouts and weighed on housing activity — both critical to furniture demand.

“The biggest impact on M&A volume in this sector is high interest rates,” Freeman said, noting they have constrained the leveraged buyout model, particularly for lower-margin consumer businesses.

Higher mortgage rates also have reduced home sales and new construction.

“The primary issue with elevated interest rates is their impact on the economy, specifically on home sales and new housing unit construction,” Chefetz said. Without a healthy housing market, he added, investors see greater risk in companies tied to new-home demand.

Performance varies across categories, however, said Peter Theran, CEO of the Home Furnishings Association. Industry data shows strong upholstery sales in 2025 and early momentum in outdoor furniture, while mattress sales have lagged in recent quarters, he noted, reflecting uneven consumer demand.

Deals still on the table

Despite the slowdown, selective activity continues.

In December 2025, Hong Kong-based Man Wah Holdings acquired upholstery manufacturers Southern Motion and Fusion Furniture from private equity firm Gainline Capital Partners, marking a PE exit while expanding its US manufacturing footprint.

Private equity remains a key driver of deal activity. Dunes Point Capital acquired luxury textiles brand Kravet in 2024, while PE-backed mattress and bedding company Resident Home sold to Ashley Furniture Industries in 2023. Bob’s Discount Furniture, backed by Bain Capital, completed an IPO in February.

Those deals reflect the market’s current focus on differentiated brands and growth-oriented assets, Chefetz said. With fewer companies performing well enough to pursue a sale, “only the strongest performers with unique talents are brave enough to test the sellers’ market,” he said, helping keep multiples elevated.

Well-upholstered companies

Even in a slower market, certain subsectors are attracting strong interest.

Businesses that combine products with services — such as design firms — are appealing because domestic service revenue helps offset tariff exposure, Freeman said.

Premium segments are also drawing attention. Todd Harmon, CEO of Aura Modern Home, said niche design brands can outperform in downturns.

“Niche companies with a specific design … are still pulling in higher offers because they weather downturns better,” he noted.

Distinct design aesthetics, such as Japandi – which blends Japanese minimalism with Scandinavian aesthetics – can command premium valuations given their relative resilience in downturns, Harmon added.

Branded direct-to-consumer furniture and high-end lighting also remain attractive to investors, underpinned by loyal customer bases and stronger margins, he said.

Rates hold the key

For now, buyers are treading cautiously rather than betting on a near-term housing rebound. Sources say the key to unlocking deal activity is lower interest rates and clearer tariff policy.

“A decline in the cost of capital could have a domino effect on more home sales, higher new-unit construction and ultimately more revenue and better profit margins,” Chefetz said.

Freeman agreed, adding that lower rates would revive leveraged buyouts and ease pressure on real-estate development.

“Right now,” Freeman said, “there’s a lot of money sitting on the sidelines waiting for interest rates to decrease so more deals start to pencil again.”