The M&A market is at a pivotal moment as 2025 unfolds, with shifting interest rate sentiment, geopolitical uncertainty, and evolving deal structures playing a major role in how transactions are executed. To gain insight into what’s happening behind the scenes, I sat down with Jennifer Cuello, Partner at EisnerAmper, one of the leading audit, tax, and advisory firms serving middle-market firms, private equity, and venture capital funds.
Jennifer brings a deep understanding of financial services and deal-making dynamics, having worked with funds ranging from $10 million in assets under management (AUM) to multi-billion-dollar private equity firms. She also previously served as President of the Association for Corporate Growth (ACG) DFW, making her particularly well-positioned to discuss market trends, deal flow, and strategies for maximizing value.
See the full interview here.
The 2025 M&A Market: Optimism with a Side of Uncertainty
Jennifer described 2025 as a year that was widely expected to bring a strong resurgence in M&A activity.
“Going into 2025, the general sentiment was that it was going to be a strong year for deal-making,” she explained. “There’s availability of capital, and there’s pressure to deploy that capital.”
Several key factors are driving increased transaction volume, including:
- Private equity and venture capital funds looking to exit investments that have been held longer than expected.
- Lower interest rates, making deal financing more attractive.
- More favorable regulatory conditions than in previous years.
- The integration of AI in deal sourcing and diligence, which is making transactions more efficient.
However, despite these positive tailwinds, uncertainty remains.
“There’s a lot of market volatility right now, particularly due to tariff concerns and geopolitical instability,” Jennifer noted. “That kind of uncertainty can’t be ignored, even though my colleagues in the deal space all seem very busy.”
Where Investors Are Finding Value in 2025
With high competition for quality assets, many firms are getting more creative with their exit strategies.
Jennifer highlighted continuation funds as a major trend.
“Some of the limited-life funds that were struggling to exit investments are establishing continuation funds,” she explained. “This allows them to extend their holding period without the pressure of the original fund’s term limit.”
While this can be a good solution for investors, it often comes at a slight discount to prior valuations—a tradeoff that some firms are willing to accept in order to avoid selling assets at distressed prices.
Another trend Jennifer pointed out is take-private transactions, in which public companies are acquired and returned to private ownership.
“We’re seeing some of our clients participate in take-private deals,” she said. “Companies that went public in 2021 and 2022 at high valuations but have since struggled are now being acquired by private equity firms.”
A major example is Walgreens, which had been public since 1927 but was recently taken private by Sycamore Partners.
“These large transactions create opportunities for banks, private credit firms, and alternative lenders, as they often require creative financing structures,” she noted.
Interest Rates and Tariffs: How They Are Shaping Deals
While interest rates have stabilized, the impact on deal financing remains a key topic of discussion.
“Even though rates are expected to remain stable, I don’t know that it will necessarily change much for deal activity,” Jennifer said. “Compared to previous years, the cost of capital has come down, which is creating a more favorable environment for M&A.”
However, tariffs and geopolitical instability could pose risks.
“Tariffs are a huge wildcard right now,” she explained. “They are creating volatility in the market, and that could disrupt deal flow.”
Jennifer emphasized that while interest rate stability is a net positive, the uncertainty around global trade policies could lead to deals being paused rather than completed.
“I just hope that we don’t see deals put on hold, because there’s a lot of pent-up demand for transactions,” she added.
The Debate Over Carried Interest: A Potential M&A Game-Changer
One of the most contentious issues in the financial world today is the tax treatment of carried interest, which could significantly impact private equity and venture capital deal structures.
“Carried interest is a hot topic again, and it’s dividing opinions,” Jennifer explained. “On one hand, it incentivizes fund formation and investment in businesses, but on the other, how it’s taxed is under heavy scrutiny.”
Currently, carried interest is taxed at a preferential capital gains rate of 20%, rather than the higher ordinary income tax rate of up to 37%.
“This debate is not new,” she noted. “Every president for the last three administrations has pledged to close the so-called loophole, but nothing has fundamentally changed.”
If higher taxes on carried interest do go into effect, Jennifer believes it could lead to:
- Fewer new private equity and venture capital funds being launched.
- Shifts in fund structures, with firms renegotiating terms with limited partners.
- Changes in exit strategies, as firms adjust their models to maintain returns.
“We don’t know what will happen yet, but if carried interest gets taxed at ordinary income rates, it could make a big impact on how deals are structured,” she said.
Why Texas and DFW Continue to Dominate M&A
Despite the national and global uncertainty, Texas remains a leader in deal-making—and Jennifer has seen firsthand how DFW has evolved into a major financial hub.
“Texas is the hottest spot for business relocations,” she said. “Companies of all sizes, from small businesses to major corporations, are moving here.”
One surprising example of this trend?
“Even Kentucky Fried Chicken is moving its headquarters from Kentucky to Texas,” Jennifer noted. “If that doesn’t tell you something about Texas’ business-friendly environment, I don’t know what does.”
Several key factors are driving Texas’ dominance:
- A pro-business tax and regulatory environment.
- A growing population, which fuels workforce expansion.
- The rise of Texas as a leader in AI, aerospace, and energy.
- The Texas Stock Exchange (TXSE) launching soon, further solidifying the state’s financial influence.
However, what sets Texas apart most is its relationship-driven deal culture.
“When people do deals here, they want to know the teams and companies they are working with on a deeper level,” Jennifer said. “That’s not something you can quantify, but it absolutely impacts the business climate.”
Final Thoughts: What’s Next for M&A in 2025?
As we move further into the year, several key themes are emerging in M&A:
- The market remains active, but uncertainty could delay deals.
- Private equity firms are getting creative with exits, using continuation funds and secondary transactions.
- Take-private deals are gaining momentum, creating opportunities for lenders and investors.
- Interest rates are stable, but tariffs and geopolitical risks are major concerns.
- The carried interest debate is heating up, with potential tax changes that could reshape deal structures.
- Texas and DFW remain a powerhouse, attracting more businesses and investors than ever.
Jennifer remains optimistic but cautious about the rest of 2025.
“I hope that the uncertainty settles down and we see real momentum later this year,” she said.
For business owners, investors, and dealmakers, one thing is certain: staying informed and adaptable will be key to success in 2025’s evolving M&A landscape.
For more insights, visit the Dealmakers Series hub.
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