USA – MARYLAND Trends and Developments Contributed by: Michael Hardy, Joseph Machi, Nicholas Stewart and Leen Al-Alami, Duane Morris LLP
come to fruition. The Department of Justice (DOJ) and Federal Trade Commission continue to apply rigor - ous merger review standards, particularly for large- cap transactions and highly consolidated sectors. Both agencies have reaffirmed the merger guidelines established by the previous administration, signalling continued scrutiny of transactions that may diminish competition. Although DOJ leadership has indicated a willingness to resolve certain concerns through negotiated remedies, regulatory approval remains a significant gating issue in complex transactions. In response, dealmakers are adopting more proactive strategies, including early risk assessments and pre- filing consultations, to identify and address potential issues. Private equity sponsors pursuing platform and add-on acquisitions are also placing greater emphasis on monitoring cumulative market share across their portfolios to pre-empt potential antitrust scrutiny. The Trump administration’s immigration enforcement policies may have a significant detrimental impact on businesses with large unskilled labour forces, includ - ing those in the middle market, and particularly those in industries like hospitality and agriculture that often employ high levels of foreign-born individuals. The disruption in the labour force caused by these policies is a significant concern for both private equity spon - sors with current investments in those businesses as well as those analysing acquisition opportunities. Industry Sector Implications In 2025, deal activity remains subdued across several industry sectors. Elevated interest rates and tighter credit conditions continue to weigh on real estate and consumer sectors, where persistent margin pressure and shifting demand patterns have widened valuation gaps. Private equity deal activity has slowed in finan - cial services due to ongoing regulatory uncertainty and sustained margin compression. Within industrials and infrastructure, cross-border and capital-intensive segments remain constrained by trade friction, supply chain volatility and higher financing costs. By contrast, M&A activity remains strong in sectors positioned for long-term structural growth. • Technology remains a top performer, with IT deal value reaching a ten-quarter high earlier this year.
Sponsors are focused on vertical SaaS, AI-driven platforms and cybersecurity assets, where acceler - ating demand for digital transformation, generative AI and business automation is fuelling investment momentum. This aligns well with the “lighthouse industries” identified by Maryland’s governor, including information technology. • Healthcare deal activity is supported by demo - graphic tailwinds and rising demand for outpatient and tech-enabled care, further bolstered by policy initiatives targeting disease prevention and person - alised medicine. This is welcome news for Mary - land’s vibrant life sciences industry. • Investor demand for clean and renewable energy remains strong, with energy transition and domes - tic oil and gas infrastructure gaining traction as key drivers of energy security and supply chain stabil - ity. • Within industrials and infrastructure, reshoring, advanced manufacturing and logistics have seen renewed sponsor interest, driven by supply chain optimisation and public infrastructure investment. • The services sector has also fared well, offer - ing steady growth and operational flexibility with minimal sensitivity to economic pressures. Demand for outsourced solutions and professional services continues to support steady deal flow despite broader market uncertainty. • Government services and defence contracting have grown more attractive amid geopolitical insta - bility and expanded federal spending on national security, which will provide Maryland with some opportunities even as it grapples with a dispropor - tionate impact from federal cuts and layoffs. Types of Deals Anticipated Although the first quarter of 2025 was cause for opti - mism, with a steady volume of deal activity and private equity investment, the backdrop of uncertainty, geo - political risk and regulatory oversight has tempered growth and activity in the second quarter of the year. Exits Between 2010 and 2020, the amount of capital returned to buyout fund investors each year as a per - centage of net asset value ranged between 20% and 30%. By 2024, that ratio had fallen to its lowest since 2008, hovering at around 11%, which is anticipated to
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