In June 2024, a Houston-based company called LandBridge filed an IPO that all but dared the public to invest.
The prospectus offered 14.5 million Class A shares at a price per share between $19 and $22. But the offering represented only a 20.1 percent interest in a company that the prospectus promised would not be owned by its Class A shareholders.
The remaining 79.9 percent would be held by WaterBridge, a LandBridge sibling under the umbrella of Five Point Energy, a privately held Houston oil & gas exploration company founded in 2012.
There was more. Consider the caveats about potential conflicts of interest:
Our Operating Agreement will provide that LandBridge Holdings and its affiliates are not restricted from owning assets or prohibited from engaging in other businesses or activities, including those that might be in direct competition with us.
And in case the point had not been made strongly enough, there was this:
Our key agreements, including our Operating Agreement and the OpCo LLC Agreement, were negotiated among related parties, and their respective terms, including fees and other amounts payable, may not be as favorable to us as terms negotiated at an arm’s-length basis with unaffiliated parties.
It may be a good time to point out that there was absolutely nothing wrong with this. Five Point made it clear that it planned to buy for itself a majority of the LandBridge shares.
“Five Point will own a majority of common shares immediately following the offering and owns a majority equity interest in … WaterBridge,” the prospectus noted.
There was a point to the offering’s complexity; in fact, several. The hybrid structure offered tax advantages. Its pricing offered an outside valuation for investors in LandBridge. But it was also part of a strategic play by Five Point to parlay its traditional E&P assets — lots of Delaware Basin surface acreage owned by Landbridge; and one of the largest O&G water distribution networks in the nation owned by WaterBridge — into something even more forward-thinking.
Unlike businesses that focus on buying oil and gas royalty interests, which are more directly exposed to commodity prices, our focus is on surface acreage ownership and the associated fee-based revenue. As a result, we expect to acquire additional mineral interests only incidentally in connection with property acquired primarily for other purposes and, consequently, oil and natural gas is expected to become a smaller percentage of our total revenues over time.
What the company was planning, the prospectus explained, was to use its existing surface acreage, along with its non-O&G infrastructure (roads, power lines, etc.), to promote other uses, including natural gas processing, cryptocurrency mines and, of course, data centers.
Five Point GC Frank Bayouth, a founding partner of Skadden’s Houston office, did not respond to a request to discuss the company’s strategy behind the IPO. He’s been busy. In the 16 months since that initial LandBridge offering, Five Point has executed a similar IPO for WaterBridge, sold a sour gas processing plant for $2.4 billion, entered a joint venture for the development of a 2,000-acre West Texas data center, created a new portfolio company to be known as PowerBridge and changed the company’s name to Five Point Infrastructure.
Five Point Energy is not your rich grandfather’s oil company. But by evolving standards, the LandBridge deal is not particularly unusual in its complexity, especially these days.
Deals involving hundreds of millions and billions of dollars are, by their nature, complicated. But over the past two years, publicly reported deals, even as described in their regulatory releases, have grown more intricate and detailed. The reasons vary from deal to deal, but complexity has become a near constant.
Deals once valued in simple terms of cash or stock (or both) often include variables like earnouts, sales and purchase agreements, preferred equity investments, credit equity agreements, special purpose vehicles, programmatic joint ventures, majority recapitalizations, mezzanine notes — even arcane foreign tools like scheme implementation deeds.
“Complexity is the name of the game,” says John Pitts, a partner at Kirkland & Ellis. “And I think that’s what top tier law firms are feasting on right now: solving different problems and complex situations. That’s a differentiating factor: whoever has the expertise, the depth and the market intelligence to handle that is breaking away in this market.”
His Kirkland colleague Kevin Crews agrees: “Dealmakers are increasingly relying on these complex structures, not just buying and selling a company or not just a two-way joint venture intended to bridge different things. It could be a valuation gap caused by market volatility or tighter credit or economic uncertainty. It could be any number of things.”
“We’re often juggling buyers and sellers who are pressured to act due to strategic or investor liquidity needs as well as, like, different valuations gaps. We’re seeing some old tools in the toolkit come out; sometimes multiple tools at a time,” Crews says.
There are many drivers in this evolution of dealmaking. To begin with, the market, in itself, is a puzzle.
Interest rates are down, but not by much; the Fed prime rate of 7.50 percent in December 2024 fell to 7.25 percent at the end of September. Inflation, which began the year at 3.0 percent, still lingered at 2.9 percent in August.
Dominated by recent big-ticket transactions, global deal value in the first half of 2025 rose by more than 12 percent from H1 2024, according to S&P Global. Over the same period, deal count fell by 9 percent.
In Texas, according to data from The Texas Lawbook‘s Corporate Deal Tracker, the disparity is even more pronounced. During the first three quarters of 2025, deals led by Texas lawyers rose by more than 35 percent in value, year over year. Deal volume, on the other hand, was down by nearly 12 percent.
The downturn in deal count has led to disappointment across the board. PE fundraising, poised this year for a post-election surge after more than three years of decline, declined even further in Q2 2025, with a 48.8 percent drop in value year-over-year. And dry powder remained near record levels: $2.515 trillion at mid-year, just 7.7 percent below the 2023 record of $2.725 trillion.
At a recent M&A Conference sponsored by the University of Texas School of Law, the mood was one of disappointment. Despite a meteoric trail of AI-driven megadeals involving data center infrastructure, middle-market PE exits have kept their recent sluggish pace.
Brent Beckert, a partner at Haynes Boone, summed market reluctance this way: “You had high interest rates. You had mismatched valuation expectations, only magnified by the tariff buzz around certain dates. So, it was not a recipe for PE exits, and it created a pent-up demand for deals and distribution of capital.”
Hilary Wiek, senior strategist at Pitchbook, is less delicate.
“The flywheel has slowed. Decreased deal flow has led to decreased distributions, which has led to decreased fundraising and less capital for deals.”
“Valuations are a big problem,” says Matt Fry, a capital markets partner at Haynes Boone. “There’s a disparity between what buyers think a company is worth and what the sellers think of the company. I’m seeing lots of more. increasingly complex workarounds for some of these problems. And it seems to me it’s sort of changing the work of the lawyers involved because your work gets more complicated all the time.”
Markets are imperfect in different ways and at different times. They are also cyclical. And historically, when buyers and sellers couldn’t agree on terms, they would simply wait.
But a surge of market excitement for all-things involving artificial intelligence, particularly data centers and reliable power, has generated a sense of urgency for deal-making in any business sector that could conceivably profit: from real estate, rare earth mining, utilities and natural gas sources to HVAC maintenance, coolant technologies, electrical services, metal tubing, grid management, energy storage and water.
And with the rise of private lending since the collapse of 2008, that $2.5 trillion in restless dry powder includes a vast array of investors — pension funds, family offices, trade unions, school endowments, hedge funds, savings institutions, sovereign wealth funds — each with its own priorities, preferences and investment timelines.
As a result of these new players, complex tools are needed to bridge the gap to make deals happen. Those tools, few of which are particularly new, can come in the form of earnouts, equity loans, private offerings, sale and purchase agreements (SPAs), long-term leases or in combinations of any and all.
“We’re seeing some old tools in the toolkit come out — sometimes multiple tools at a time,” said Crews. “We’re seeing a lot of consortium vehicles, which could be two or more investors combining in a single entity involving any number of objectives. It could be for a larger check size. It could be for back-leverage financing. Or it could be a structured or hybrid equity solution, or a way to chop up the governance and other rights among the parties that works for everybody.”
The tools, however, are being used in deals big and small.
In October, Meta Platforms, the parent company of Facebook, sold an 80 percent interest in the massive Hyperion Data Center campus already under construction in Louisiana. The deal came in a form used often in mega deals of late: a $27 billion joint venture with a private equity funder, in this case Blue Owl. Meta will continue to build and operate Hyperion with a minority share. But Meta also included a hedge for Blue Owl — a long-term lease of the property designed to guarantee profitability for its PE partner for at least 16 years.
Brittany Sakowitz, a Kirkland partner who advised Blue Owl on the deal, told the UT M&A conference that instead of buying companies and building them for sale, private equity funds are more willing to take positions — even minority positions — in larger companies in order to take advantage of the outsize scale of billion-dollar deals.
“You’ve seen private equity sponsors be very interested in taking smaller slices of larger companies; there are a lot of advantages to that, particularly in utilities and some of the infrastructure outlets specifically, where there are big opportunities for stable cash flow from positions you can hold, but you’re not buying an entire company,” Sakowitz said.
Moreover, many private equity firms are finding it comfortable to hold on to their investments for longer periods, prompting the need for complex continuation vehicles that maintain and recapitalize their investments while offering an off-ramp for investors who want to exit.
In Texas, no other industry illustrates the evolution towards complexity more than the energy sector, where federally regulated midstream networks join the tangle of upstream royalty holders, credit-alert E&Ps and downstream customers.
“It used to be kind of this simple stream,” says Erin Hopkins, a partner at Paul Hastings. He says the entry of private equity players changed the dynamics of oil deals.
“They weren’t historical, ‘I’m-going-to-go-drill-a-well’ guys; they were financial backers. They were coming in and saying, ‘I’m going to put some money in here and take a PE model and try to monetize upstream into the PE kind of thing,’ ” Hopkins says.
Upstream PE investment shifted to midstream PE investment, where pipelines were segmented into investment pieces, expanded through construction and augmented through bolt-on acquisitions.
“Instead of it being integrated into the upstream oil company, it became its own segment that had its own market and its own investors,” Hopkins said.
Changes in the energy market itself have exacerbated all of that. The rise of alternative energy technologies and infrastructure investment followed the precipitous fall of carbon-based energy demand during the pandemic. The second phase of Russia’s invasion of Ukraine in 2022 accelerated the rise of LNG exports and the consolidation of midstream services that feed the massive and expensive new facilities across the Gulf Coast.
And lately, and perhaps most obviously, the insatiable demands of artificial intelligence for all of that — the diverse energy sources and the infrastructure to support it — has launched an increasingly visible hyperscaling of deal terms all on its own.
“I think there’s always a tendency for deals to get more complex, because the law changes and deal structures evolve,” says Fry. “But that’s just part and parcel of being securities lawyers. We’re very versatile and grow with the market.”
And size doesn’t always matter.
“Just this year I had a deal with a high net worth individual on the sell side that had a tax sanctuary residency in Puerto Rico,” said Hopkins, describing a 13-step reorganization required to deliver funds from the sale with a resulting tax efficiency.
“That has complexity, whereas it could have just been a simple buy-sell,” said Hopkins. The object is always to ensure that the deal is solid and defensible, while delivering what a client wants and/or needs. Increasingly, that requires complexity.
“Deals are simple if you understand the drivers of the parties involved,” Hopkins said. “All this is the drivers.”