The M&A landscape in 2025 is evolving, influenced by shifting interest rates, changing capital structures, and the impact of tariffs on global trade. While some firms are still taking a cautious approach, others are seeing a significant increase in deal activity as market conditions stabilize.
To better understand the current state of middle-market M&A, I sat down with Dane Harris, Partner-in-Charge at Bennett Thrasher’s Dallas office. Dane leads the Transaction Advisory Group, which handled over 160 deals in 2024 and is on track to exceed 200 transactions in 2025.
Dane shared his insights on deal flow, valuations, the rise of private credit, and why Texas remains a top market for M&A.
The State of M&A in 2025: A Market Regaining Momentum
Dane highlighted that M&A activity in Texas has remained strong, even when the broader market experienced slowdowns in 2022 and 2023.
- Texas has a robust dealmaking environment, fueled by financial sponsors, private equity firms, and corporate buyers.
- Some firms took a portfolio management approach in 2023, optimizing existing assets rather than pursuing acquisitions.
- 2025 is shaping up to be a strong year, with a renewed sense of urgency in deal-making.
“We’ve seen a huge pickup in the backlog and the speed at which deals are turning,” Dane explained. “It’s not quite post-COVID 2021 levels, but we’re moving in that direction.”
A key takeaway from Dane’s perspective is that while the M&A landscape is stabilizing, certain challenges remain, including valuation expectations, interest rates, and regulatory uncertainty.
Are Platform Investments Returning?
One of the biggest trends over the past 12-18 months was the shift toward add-on acquisitions, where private equity firms expanded existing portfolio companies rather than pursuing new platform investments.
Dane confirmed that platform investments are making a comeback:
“There were probably more add-ons over the past year to 18 months, but this year platform investments are back in play,” he said. “Sellers who were waiting for 2021 valuation levels are now realizing that stability and certainty in the market may be a better opportunity.”
Dane emphasized that several factors are contributing to the resurgence of platform deals:
- Interest rates have stabilized—Even though they remain elevated, buyers and lenders can now plan for the future.
- Political and economic clarity—The policy environment for the next few years is clearer, reducing hesitation from business owners.
- More sellers returning to the market—With valuations normalizing, business owners who were hesitant to sell in the last two years are now re-engaging in the M&A process.
Interest Rates and Tariffs: How Are They Impacting Deals?
Interest Rates: Stability Matters More Than the Absolute Rate
Dane noted that while interest rates remain high, the fact that they have stabilized is a positive development for M&A.
“What level the interest rates ultimately settle at is not as important as stability and predictability,” he said.
Uncertainty in 2022 and 2023 made financing difficult, but buyers and lenders have now adapted to the new reality.
Tariffs: A Growing Concern
While interest rates may not be a major barrier, tariffs are starting to impact deal structures and valuations.
Dane revealed that several deals in early 2025 have already been affected by tariff concerns:
“We’ve certainly had already this year two or three deals that have been impacted by tariffs. Even if it’s not a deal breaker, it’s an added uncertainty that makes structuring deals more difficult.”
The biggest challenges related to tariffs include:
- Higher import costs—Companies that rely on foreign-sourced goods are facing potential margin compression.
- Unpredictability—Tariffs have been on-again, off-again, making it difficult for buyers to forecast expenses.
- Working capital constraints—Businesses may have to hold more inventory to mitigate tariff risks, which affects cash flow and financial structuring.
Dane believes that as the year progresses, more deals will take a “wait-and-see” approach when it comes to businesses directly impacted by tariffs.
The Rise of Private Credit: A Game-Changer in M&A Financing
Private credit has grown significantly in the last two years, providing an alternative to traditional bank loans for financing acquisitions.
Dane confirmed that private credit is playing a larger role in transactions:
“We’ve seen quite a few deals going the private credit route. But we’ve also seen robust equity investments as well,” he noted.
The shift in the capital stack has created new financing structures, including:
- Higher leverage options from private credit funds.
- Creative solutions that mix equity and debt financing.
- More room for structured earnouts and seller financing.
“As valuations have gotten tighter over the last few years, we’re seeing more creative solutions and a more diverse range of financing options than we would have seen a few years ago,” Dane added.
This flexibility is allowing deals to continue moving forward, even as traditional lenders remain more conservative.
Where Investors Are Finding Value in 2025
Dane highlighted that middle-market investors are focusing on value creation rather than chasing inflated valuations.
“Our clients have been very skillful in taking businesses that maybe have a little bit of hair on them and working through that,” he said.
This means investors are:
- Focusing on businesses with strong operational improvements.
- Finding overlooked opportunities in industries that require operational expertise.
- Structuring deals with value-add potential rather than relying on market appreciation.
Rather than seeking “perfect” companies, buyers are now willing to take on complexity—as long as they have a clear roadmap for operational improvements.
Why Texas and DFW Are Dominating M&A
Texas, and DFW in particular, continues to be one of the most active M&A markets in the country.
Dane attributes this to Texas’s unique business environment:
“DFW is just a rocket ship,” he said. “There’s a Wild West, entrepreneurial environment here, and really anything is still possible in Dallas.”
He pointed to several factors that make Texas an attractive destination for dealmakers:
- Business-friendly tax policies—No state income tax and pro-business regulations.
- Strong corporate relocations—Major corporations are moving headquarters to Texas, driving deal flow.
- Diverse industries—Texas is no longer just oil and gas—it has thriving sectors in technology, healthcare, logistics, and manufacturing.
- A deep talent pool—Texas has top universities and a highly skilled workforce, making it easier for businesses to scale.
This combination makes DFW one of the most attractive markets for both buyers and sellers in the middle market.
Final Thoughts: What to Expect in 2025
Dane believes that 2025 will be a strong year for M&A, especially in Texas.
While interest rates and tariffs create challenges, the stabilization of market conditions is driving renewed deal flow.
Key takeaways for business owners and investors:
- Platform investments are back—Buyers are no longer just focused on add-ons.
- Private credit is reshaping deal structures, creating new financing opportunities.
- Texas remains a top destination for M&A activity.
As dealmakers navigate this evolving landscape, those who prepare well and stay agile will find the best opportunities.
For more insights on M&A and strategic deal-making in DFW, check out the Dealmaker Series here.
