The M&A market has experienced significant shifts over the last few years. From record-high valuations in 2021 to a slowdown in 2023 due to rising interest rates, dealmakers have had to adjust strategies to navigate economic uncertainty. As we enter 2025, deal volume is increasing, private equity firms are deploying capital, and middle-market businesses are positioning themselves for exits.
To gain deeper insights into the current state of M&A, the impact of economic factors, and deal structuring trends, I sat down with Daniel Boarder, Partner in the Deal Advisory Practice at Whitley Penn. Daniel works closely with buyers and sellers in middle-market transactions, specializing in quality of earnings (QoE) analysis and due diligence. He shared key takeaways on market trends, financing shifts, and what dealmakers should expect in the months ahead.
See full interview here
M&A Activity in 2025: Momentum is Building
When asked about deal flow in 2025, Daniel confirmed that activity remains strong, particularly in Texas.
“We have seen a significant uptick in deal activity within the past six months,” Daniel noted. “DFW continues to be one of the most pro-business markets in the country, attracting buyers, investors, and corporate relocations.”
Texas has long been a top state for business-friendly policies, making it an attractive market for private equity firms, family offices, and corporate buyers. Daniel pointed out that the pro-business tax structure and economic stability have fueled dealmaking across various industries.
“Texas and the M&A market continue to capitalize on corporate migration, favorable tax policies, and a strong investment climate,” he explained.
For business owners looking to sell or raise capital, this means that 2025 presents favorable conditions—but preparation and understanding key market trends will be essential.
How Interest Rates and Tariffs Are Affecting Deals
Interest Rates: More Impact on Structure Than Volume
Rising interest rates were a major concern in 2023 and 2024, but Daniel believes they have had less of an impact on total deal activity and more on how deals are structured.
“From an interest rate standpoint, we never saw a significant slowdown in deal activity—just changes in deal structuring,” Daniel said. “With so much private equity dry powder waiting to be deployed, investors didn’t stop buying, they just adjusted their financing structures.”
Instead of high leverage transactions, dealmakers are now using:
- More equity and less debt in capital stacks.
- Delayed refinancing strategies to wait for better interest rates.
- Seller financing and earn-outs to bridge valuation gaps.
“Debt levels may have decreased slightly in deals, but M&A hasn’t slowed down—it’s just that buyers and lenders are getting more creative in how they structure transactions,” Daniel explained.
Tariffs: A Potential Risk Factor in Future Deals
While interest rates have stabilized, tariffs remain a growing concern, particularly for businesses with international supply chains.
“We haven’t seen major tariff-related deal disruptions yet, but they could become a factor,” Daniel observed. “The real issue is uncertainty—buyers don’t want to acquire a company only to realize their cost structures will increase due to tariffs.”
With tariff threats on imports from China, Mexico, and other trade partners, dealmakers need to incorporate supply chain risk assessments into their due diligence.
Key questions buyers are now asking:
- Where are your raw materials and components sourced from?
- If tariffs are introduced, can you pass increased costs onto customers?
- Are there alternative suppliers or nearshoring opportunities available?
Daniel believes that companies that proactively address supply chain risks will be more attractive acquisition targets.
Industry Trends: Where is the Activity in 2025?
While Whitley Penn works across multiple industries, Daniel identified three key sectors that have been particularly active in M&A transactions:
- Oil & Gas – With Texas being a leading energy hub, there is significant consolidation in midstream, oilfield services, and renewables.
- Healthcare – Continued growth in private equity-backed roll-ups of physician groups, outpatient services, and specialty care facilities.
- Construction & Manufacturing – Strong demand, supply chain adjustments, and reshoring initiatives are fueling deal activity.
“We’re industry agnostic, but we see strong activity in oil & gas, manufacturing, and healthcare, especially in Texas,” Daniel noted.
For dealmakers and investors, these industries present attractive acquisition opportunities, especially as private equity firms look to expand their portfolios.
Deal Structuring in 2025: More Earn-Outs, Seller Notes, and Strategic Financing
A major shift in M&A transactions over the past two years has been how deals are structured.
“In the middle market, buyers and sellers often disagree on valuation, especially when businesses are growing rapidly,” Daniel explained. “To bridge that gap, we’re seeing more earn-outs, seller notes, and creative financing structures.”
Key trends in deal structuring:
- Earn-Outs – Buyers and sellers agree on a base price + contingent future payments based on performance.
- Seller Financing – Owners provide partial financing for buyers to close valuation gaps.
- Equity Rollovers – Sellers retain a minority stake in the company post-sale.
“In today’s market, many buyers won’t pay 100% cash upfront—instead, they prefer structures that align seller incentives with future growth,” Daniel explained.
For business owners considering a sale, this means being open to creative deal structures and ensuring strong financial documentation to justify valuation expectations.
Why Texas is a Leading Market for M&A
Texas has positioned itself as one of the strongest M&A markets in the U.S., attracting buyers and investors from across the country.
“DFW is a premier place for business,” Daniel emphasized. “Our tax structures, business-friendly policies, and economic growth make it an attractive location for M&A activity.”
What makes Texas unique?
- No state income tax – Attracts high-net-worth individuals and corporations.
- Booming population growth – Increased demand across multiple sectors.
- Diverse economy – Energy, healthcare, manufacturing, and tech continue to thrive.
- Pro-business policies – Less regulatory red tape than coastal markets.
“Many of our clients are either based in Texas or looking to acquire businesses here,” Daniel noted. “That demand keeps deal flow strong, even during uncertain economic times
What to Expect for M&A in 2025
Despite economic fluctuations, Daniel believes 2025 will be a strong year for deal activity, particularly for well-prepared business owners and strategic investors.
Key predictions for 2025:
- More private equity capital being deployed, increasing competition for quality assets.
- Greater use of seller financing and earn-outs to close valuation gaps.
- Continued interest in Texas-based businesses due to corporate relocations and tax advantages.
- More scrutiny on financials and supply chains due to tariff concerns.
For business owners looking to sell, Daniel’s top advice is:
- Have a clear and well-documented financial history.
- Be open to flexible deal structures.
- Prepare for detailed due diligence from buyers and lenders.
For investors, M&A in Texas remains a lucrative opportunity, with strong deal flow across multiple industries.
To stay updated on M&A trends and expert insights, visit JamesSackey.Marketing.
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