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Navigating M&A in 2025: The Value of Financial Due Diligence

Merger and acquisitions (“M&A”) activity showed signs of recovery in 2024, following a challenging year in 2023. Despite ongoing high interest rates, global M&A volumes increased 16% to approximately $3.1 trillion, according to the most recent data from Dealogic. This resurgence was driven by a surge in dealmaking in the fourth quarter, reflecting renewed confidence among companies.

The Goldman Sachs ‘2025 M&A Outlook predicts a continued recovery in dealmaking, noting activity is set to align with pre-2018 median levels. The macroeconomic backdrop is stabilizing, and financing markets are reopening. Notably, M&A volumes reflect the strongest level of activity since the beginning of the current rate-hiking cycle.

The strategic and private equity M&A market in 2025 is expected to be influenced by several key themes:

• Favorable Macroeconomic Conditions: Lower interest rates, moderate inflation, and positive GDP growth, creating a conducive environment for M&A activities.
• Increased Financial Sponsor Activity: Private equity firms are likely to be more active, particularly in selling mature portfolio companies to return capital to investors and raise new funds.
• AI and Digital Transformation: Companies are focusing on growth and transformation, with AI acting as a catalyst for change and reinvention.
• Cross-Border Transactions: There is growing interest in cross-border deals as companies seek diversification and capitalize on attractive valuations in different regions.
• Improved Debt Markets: Stabilizing interest rates and better debt terms are driving renewed deal activity, with narrowing valuation gaps improving exit conditions.
• Operational Improvements and Strategic M&A: There is a focus on organic growth, operational improvements, and strategic M&A, with co-investment and secondaries offering efficient ways to enhance returns.

With the predicted continued recovery of the M&A market, time is of the essence when a company is involved in a transaction. Whether a buy-side or sell-side transaction, the diligence process and the time between signing and closing a deal is extremely fast, and the critical due diligence and structuring work is compressed into a very tight timeline. Companies need as much information as possible to make important decisions and maximize value in M&A deals.

If you are a seller or a buyer, it is key that you identify a strong financial due diligence partner for the anticipated upswing in deal activity. The following are some of the value drivers of third-party due diligence, which are critical to all transactions:

Seller Considerations

• Sell-side readiness:
  • Identification of long-term or short-term projects necessary to expand enterprise value
  • Professionalization of financial function
  • Cash to accrual conversion
  • Identification, tracking, and analysis of Key Performance Indicators (“KPIs”)
  • Development of a forecast model and evaluation of prospective value
  • Preparation of management team and identification of gaps in leadership
• Sell-side financial due diligence:
  • Provides transparency and credibility with the financial information shared with buyers
  • Reduces the risk of surprises surfacing during buyer due diligence, resulting in increased surety of closing and value retention
  • Identification of issues that can be resolved or mitigated before the Company goes to the market (i.e., set the narrative)
  • Preparation of Quality of Earnings often results in expansion of enterprise value
  • Shortens the time needed between the execution of the letter of intent (“LOI”) and the signing/closing date

Buyer Considerations

• Evaluate the strengths and weaknesses of a target’s business
• Assessment of the quality of reported earnings (i.e., confirmation of adjusted EBITDA)
• Assessment of net working capital on an adjusted basis
• Identification of debt-like considerations
• Identification of key value drivers and key risks that are critical to the investment decision
• Validate or disprove key assumptions in the investment model (go or no-go decision)
• Identification of financial issues to be included/addressed in the Purchase Agreement

How Centri Can Help

Centri’s M&A Advisory team can support your company through all stages of the M&A lifecycle, including the time you build, manage, and enhance your business organically and when you are ready for a purchase or sale. Our team includes our National Office of former Big 4 professionals who have over 40 years of experience in their respective fields. We utilize our vast deal experience to provide a unique value measurement solution, enabling you to achieve your goals through successful planning and execution of both buy-side and sell-side transactions. Contact us to learn how our financial and tax due diligence experts can help your company succeed.

1. McKinsey & Company. “Top M&A Trends in 2024: Blueprint for Success in the Next Wave of Deals.” McKinsey & Company. 2024.
2. S&P Global Market Intelligence. “Global M&A by the Numbers: 2024 in Review.” S&P Global Market Intelligence.
3. Goldman Sachs. “2025 M&A Outlook.” Goldman Sachs. 2025. 
4. McKinsey & Company. “Top M&A Trends.” McKinsey & Company. 2024. 
5. Morgan Stanley. “Capital Markets Outlook 2025.” Morgan Stanley. 2025.
6. StepStone Group. “StepStone Private Equity 2025 Market Outlook.” StepStone Group. 2025.

Maxwell B. Heller

Partner | M&A Advisory Practice Leader

Max is a Partner at Centri Business Consulting and the leader of the firm’s M&A Advisory Practice. He has more than 20 years of merger and acquisition consulting experience and provides M&A advisory services to private equity firms, venture capital firms, family offices, and strategic/corporate clients. View Maxwell B. Heller's Full Bio