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The M&A market in 2025 has been defined by a sharp, late-year turnaround. After a hesitant start in the lower middle market, conditions “thawed” in the final quarter as two Federal Reserve rate cuts in September and October lowered the target range to 3.75%–4.00%, injecting a much-needed bright spot for dealmaking. Financing conditions have improved, and private equity is under pressure to deploy an estimated $3.7 trillion in dry powder, turning a market that rewarded discipline and documentation in the summer into one that now rewards timing.
However, the core reality for owners has not changed: capital is abundant, but certainty is scarce. Volatile valuations, shifting credit terms, and uneven buyer confidence mean that even attractive companies can see proceeds eroded by surprises uncovered late in diligence. This turbulence, combined with urgent tax and regulatory changes, demands a level of preparation far beyond “good enough.”
The turbulence in 2025 M&A has been compounded by strategic tax shifts that create real financial risk for owners contemplating an exit. As the year closes, sellers confront two primary tax-driven challenges that affect both timing and net proceeds.
First, the most pressing catalyst for accelerated transaction timelines is the impending sunset of the Tax Cuts and Jobs Act (TCJA) individual rate provisions, which include today’s capital gains treatment. These provisions are scheduled to expire on December 31, 2025, raising the possibility of higher individual tax rates and less favorable capital gains treatment starting in 2026. Many sellers are motivated to bring deals forward to lock in today’s tax regime, as waiting could materially increase their effective tax burden and significantly reduce the net proceeds received on a sale.
Second, the risk is not only “how much tax,” but “how clean is the file.” A seller who waits but does not use the time to address tax exposures and structure proactively, could face both higher statutory rates and heavier price chips during diligence (). In other words, the cost of delay is not just the calendar—it is the compounded effect of tax law changes plus buyer skepticism.
On top of the TCJA sunset, the One Big, Beautiful Bill Act imposes new requirements that will carry into 2026. The Act limits credits and refunds for Employee Retention Credit (ERC) claims filed after January 31, 2024, for the third and fourth quarters of 2021. It also reduced the substantial improvement threshold for property located entirely in rural Qualified Opportunity Zones from 100 percent to 50 percent, effective July 4, 2025. These changes add complexity to tax planning and compliance as companies prepare for transactions and operational decisions in the new year.
Black Diamond’s integrated M&A + tax platform
In 2025, buyers have prioritized prepared, de-risked opportunities over merely interesting stories. The late-year rebound in M&A activity has not changed that reality. It has intensified it, as more deals rush to close before tax deadlines and as buyers digest new regulatory complexity. For owners, that means the question is no longer just “Can I sell?” but “Will my company stand out as ready, well-structured, and defensible under scrutiny?”
While the M&A market cooled earlier in 2025, our firm used that period to deepen its ability to prepare owners for exits, treating the landscape as one where outcomes are driven by deliberate preparation rather than chance. The strategic response was to bring specialized tax and advisory expertise in-house, aligning exit planning, M&A advisory, and tax-aware structuring under one platform.
Black Diamond Capital Advisory Firm has welcomed the advisory practices of JBL Tax & Accounting and Alan Bender and Advisors of Northwest Arkansas into its growth platform. These practices operate under an alternative practice structure in which tax, business advisory, and other non-attest services are provided by a newly established entity on the Black Diamond platform. This integration is designed to allow business owners to coordinate valuation, deal structure, and tax planning as a unified process, rather than as separate, siloed engagements.
For business owners, this integrated model is practical, not theoretical. It means Black Diamond can now deliver deeper expertise in deal structuring, with specific focus on protecting net proceeds rather than just headline valuation. Structure, timing, and terms can be coordinated with tax strategy so that, for example, the decision to close in late 2025 versus early 2026, or to favor one structure over another, reflects both market conditions and the likely after-tax outcome for the seller.
Schedule a quick, 15-minute call today to learn more about where your business stands.