The Year-End M&A Sprint: Why Rush to Close Deals? - Petersen

As we approach the final weeks of 2025, deal teams across the country are working around the clock to get transactions closed before year-end – often called an M&A sprint. The combination of expiring tax provisions, accounting considerations, and strategic imperatives is creating powerful incentives for both buyers and sellers to cross the finish line before December 31. To determine if an end-of-year M&A sprint and rush to close deals before the end of the year, we are more than happy to provide you with everything you need to know, whether you are a buyer or seller.

The Year-End M&A Sprint: Why Rush to Close Deals Before the End of the Year? A Guide for Buyers and Sellers.

The decision that you need to get on your financial mark, get set, and go in a year-end M&A sprint is one that many buyers and sellers alike make because of the numerous benefits that ensure you will start 2026 on the right financial footing.

So, why rush to close M&A deals before the end of the year? Here’s what to know.

The Tax Cliff: Why Timing Is Everything

You need to ensure you are prepared for the coming tax year. Several provisions from the Tax Cuts and Jobs Act (TCJA) are scheduled to sunset at the end of 2025, creating a potential tax cliff that’s forcing dealmakers’ hands and spurring year-end M&A sprints.

For Sellers: The Qualified Business Income Deduction (QBID), allowing pass-through entity owners to deduct up to 20% of business income, expires December 31. For a seller with $10 million in qualified business income, that 20% deduction could mean hundreds of thousands in tax savings that vanish in January. Similarly, bonus depreciation drops from 40% to 20% in 2026, affecting deal valuations for asset sales.
For Buyers: The same bonus depreciation phase-down makes asset acquisitions less attractive from a tax perspective in 2026. Changes to the SALT deduction could also impact deal structures, particularly for pass-through entities.
The Uncertainty Factor: No one knows what 2026 tax legislation will look like. For both sides, certainty today beats speculation about tomorrow.

Accounting and Reporting Benefits

Closing in 2025 means clean year-end financials without partial-year consolidation headaches. This simplifies financial reporting, earnings calls, and analyst presentations for public companies and PE portfolio firms.

It also means cleaner earnout calculations, simpler administration of retention bonuses and equity acceleration provisions, and avoiding disputes about how to allocate partial-year results.

Strategic Imperatives Driving the Rush

It’s important that you understand the urgency and reasoning behind an end-of-year M&A sprint, which often make it a strategic business necessity for improved decision-making:

Regulatory Clarity: Many dealmakers are executing under today’s known framework rather than waiting to see how antitrust enforcement and industry regulations evolve in 2026.
Private Equity Pressure: PE deployment reached its highest quarterly level in over three years in Q3 2025. Financial sponsors face immense pressure to demonstrate activity before year-end reports go out, creating more motivated buyers willing to be flexible on terms.
Competitive Dynamics: For sellers running competitive processes, multiple buyers trying to beat the December 31 deadline creates urgency that often translates to better valuations and terms.

The Case for Waiting (If You Can Afford To)

Not every deal should be rushed to close before year-end. You should always take time to ensure you are making the right decision. Reasons to pump the brakes on a year-end M&A sprint include:

Valuation Gaps: Forcing a December close could mean leaving money on the table or buying at an inflated price if buyer and seller are still meaningfully apart on price.
Integration Readiness: Closing a transformational deal without proper integration planning is a recipe for value destruction.
Tax Law Optimism: Some sellers are gambling that Congress will extend favorable provisions, but this is a risky bet with your largest financial transaction.
Market Momentum: Robust US deal volume growth is predicted through 2026. If you believe Q1 2026 will bring even better market conditions, more buyers, higher valuations, better financing terms, waiting might pay off.

Related Article: The M&A Market is Poised for an Uptick

Making the Call: Should You Sprint or Wait?

If you have made it this far, it’s time to truly weigh the pros and cons of a year-end M&A sprint. Here’s how to decide:

For Sellers:
- Model your after-tax proceeds under both 2025 and 2026 scenarios. The QBID alone could justify accepting a slightly lower purchase price to close this year.
- Consider earnout alternatives or seller financing that allow you to capture upside while locking in 2025 tax treatment on the base purchase price.
- Engage experienced M&A tax advisors who can model scenarios and structure the deal optimally.
For Buyers:
- Use the urgency strategically in negotiations, but judiciously, as pushing too hard could kill a good deal.
- Staff up diligence teams now and be ready to work through the holidays for a serious December close.
- Consider bridge structures like earnouts, working capital adjustments, or indemnification escrows to close now and true-up later if full diligence can’t be completed by December 31.

The push to close deals before December 31, 2025, is driven by concrete financial and strategic considerations that could add up to millions of dollars and significant competitive advantages. Whether the M&A sprint to year-end is right for you depends on your specific circumstances. Making an informed decision requires understanding exactly what you stand to gain or lose. Make sure your timing is a deliberate choice rather than a default.

Related Article: Sandbagging Clauses in M&A Agreements

We Can Handle Your Year-End M&A Sprint Without Breaking a Sweat. Call Us Today to Learn How We Can Help.

The difference between closing before December 31 and waiting until January could mean hundreds of thousands or even millions in tax consequences alone, which is why a year-end M&A sprint is often a desirable option. Petersen + Landis PC specializes in guiding clients through the endlessly complex M&A closing process with a focus on maximizing value while minimizing tax exposure and legal risk. We can help you:

Model tax scenarios under both the 2025 and 2026 laws to quantify the real cost of waiting.
Structure deals creatively to meet year-end deadlines without sacrificing diligence or value.
Navigate regulatory requirements efficiently to accelerate closing timelines.
Negotiate bridge provisions like earnouts and escrows when year-end closing isn’t feasible.
Minimize risk through comprehensive due diligence, even on compressed timelines.

Ready to discuss your M&A transaction needs?

Contact Petersen + Landis PC today. We’re working through the holidays to help clients capitalize on year-end opportunities.

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