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DCA Partners - Mid Year Update - July 2025.pdf

Mid-Year Market Outlook from DCA Partners: Resilience Amid Uncertainty

DCA Partners has released its 2025 Mid-Year Market Update, highlighting a year marked by resilience and recalibration across the U.S. economy. Despite solid GDP growth and a healthy labor market, business confidence has been tempered by sticky inflation, shifting tariffs, and political uncertainty.

Key takeaways include:

• Economic Strength, But with Caution: The U.S. economy outperformed growth expectations early in the year, but consumer and corporate sentiment has weakened amid global instability and domestic policy shifts.

• Inflation & Rates: Slower-than-expected disinflation, paired with tariff-related pressures, has kept interest rates elevated longer than anticipated, challenging both consumers and business operators.

• Private Markets & M&A: Fundraising and liquidity in private equity have slowed significantly. While M&A activity is showing early signs of recovery, deals are concentrated in durable, scalable sectors like tech and healthcare.

• Valuation Risks: Equity markets are showing low risk premiums, making them vulnerable to earnings disappointments or macroeconomic surprises.

• What’s Next: As rate stability improves, cautious optimism is returning. Investors and acquirers are becoming more selective, but momentum may build if inflation eases and policy becomes clearer.

This insightful update offers valuable context for family businesses navigating investment, growth, and transition decisions in today’s complex environment.