Mergers and Acquisitions in a Buyer’s Market

July 2025

Overview

Today’s mergers and acquisitions (M&A) landscape is shaped by a combination of economic uncertainty, evolving buyer behavior, and heightened need for internal readiness. This shift reflects broader patterns across industries where volatility and caution drive decision-making. Sellers are continuing to experience valuation resets from their previous highs, particularly those seen in 2020 and 2021. This reset is accompanied by enhanced diligence from buyers, who are now more inclined to scrutinize operations and walk away from deals at the first sign of concern. In response, sellers must prepare well in advance by addressing internal inconsistencies and aligning expectations with current market realities.

Additionally, legal professionals are adapting their roles due to new technologies like AI and increasing client demands for speed and precision. This presents challenges and opportunities for law firms, which must now reframe their value proposition and train lawyers differently. In this evolving context, a seller's preparedness, a buyer’s caution, and the legal team’s agility can determine the success or failure of a transaction. The broader uncertainty in global and domestic contexts, marked by macroeconomic factors like interest rates and economic stress, underscores the importance of adaptability and long-term strategic positioning for both buyers and sellers in M&A.

Key Issues Identified

Valuation Discrepancies and Buyer Power

A defining feature of the current M&A environment is the notable shift in leverage toward buyers. Sellers are no longer enjoying the high valuations seen in the recent past. The market has recalibrated, and while seller expectations are gradually aligning with these new norms, many are still struggling to adapt to reduced deal values. Buyers, now armed with greater leverage, are more cautious and selective. They are taking their time, conducting deeper diligence, and renegotiating economic terms or walking away from deals entirely if red flags appear. This newfound prudence has led to a slowdown in deal-making and has made the M&A process more unpredictable.

The result is a growing disconnect between buyer expectations for operational clarity and seller readiness. Where once a deal was almost certain to close once it reached negotiation stages, it is now common for transactions to fail due to litigation risks, compliance gaps, or messy records. In this buyer-driven market, hesitation is common, and transactions are easily derailed if sellers do not present well-documented and well-maintained operations. Valuation and leverage are not just numerical discussions anymore—they reflect broader concerns over certainty, reliability, and trust in a volatile market.

Corporate Hygiene and Internal Readiness

Internal preparedness has emerged as a critical factor in deal success. Many sellers underestimate the importance of proper documentation and operational transparency, often due to informal internal practices. Multimillion-dollar businesses sometimes operate with inadequate corporate records, unresolved ownership questions, and unsigned major contracts. These issues, once tolerated or overlooked in a seller's market, are now potential deal-breakers. Today’s buyers often expect clean, formalized records including board minutes, shareholder agreements, and executed contracts. A lack of corporate hygiene can result in delays, renegotiations, or full withdrawals by buyers.

This necessitates a cultural and procedural shift for sellers. Preparation must begin long before a business is actively marketed to potential buyers. It involves detailed reviews of all corporate documents, proactive management of employee and contractual matters, and clear governance practices. Treating M&A readiness as a continuous process, not an afterthought, is now essential. Without this mindset, sellers risk presenting their business as disorganized or high-risk, giving buyers a valid reason to back out. In a cautious market, even the perception of disarray can be fatal to closing a deal.

Deal Fatigue and Strategic Uncertainty

An underlying issue permeating the M&A space is deal fatigue—a byproduct of protracted negotiations, delays, and shifting terms. This fatigue affects both buyers and sellers, often turning promising deals into stalled or abandoned efforts. The uncertainty surrounding global markets, interest rates, and macroeconomic conditions has intensified this strain. Buyers hesitate and sellers lose momentum. What was once an opportunistic environment is now filled with hesitation, qualified agreements, and, increasingly, renegotiation.

This uncertain backdrop demands resilience and clarity. Legal teams, especially in-house counsel, must stay agile and anticipate changes on an almost daily basis. Quick adaptation to evolving challenges—whether tariffs, employment shifts, or broader economic tremors—is key to maintaining deal viability. Furthermore, professionals involved must treat M&A as a core priority, not a secondary task. Without this commitment, delays compound and fatigue deepens, leading to breakdowns in communication and trust. Navigating this era requires leaders who can act decisively while others hesitate, positioning early and responding with speed and precision in a complex landscape.

Conclusion

To navigate today’s M&A market effectively, sellers must prioritize early preparation, maintain operational clarity, and embrace rigorous corporate hygiene. Clean records, documented decisions, and signed contracts are no longer optional—they are essential to reducing buyer skepticism and preserving deal momentum. Sellers who treat readiness as an ongoing discipline, rather than a reactive task, will be better positioned to close successfully.

On the buy-side, decision-makers should recognize their current leverage but use it strategically. Overplaying that power can lead to missed opportunities. Instead, thoughtful risk-taking and timely action can provide a competitive edge in a market slowed by hesitation.

Legal teams and advisors must adapt quickly. With AI reshaping the diligence process and client expectations evolving, legal’s role must transition from reactive gatekeeper to strategic partner. That means adding value through insight, speed, and clarity, rather than simply process.

Ultimately, resilience and decisiveness are the defining traits of successful actors in this environment. Companies that stay agile, invest in preparedness, and lead through uncertainty—rather than waiting for it to clear—will have the best chance of converting opportunity into outcome.