Private equity firms are facing early tests to the theory that Donald Trump’s return to the White House is a net win for America’s dealmakers.
Executives at some of the largest buyout firms, who were among those predicting that Trump would supercharge the mergers and acquisitions market, are now searching for clues on whether his administration’s hot-button policies might do the opposite.
The threat of tariffs has amplified concerns about inflation and potential knock-on effects on Federal Reserve rate actions. Trump’s M&A antitrust approach could be more heavy-handed than first thought. And private equity firms are confronting the prospect of Trump cracking down on carried-interest, cutting into the portion of returns kept by dealmakers.
“Private equity firms are facing up to a mixture of issues, and uncertainties, that could affect the industry in very different ways,” said Kevin Desai, US private equity leader at PwC. “Policies like tariffs and changes to antitrust policy will demand that firms ensure they have full visibility into their core portfolio operations beyond what is typical today.”
‘Unique Cocktail’
In the bread-and-butter business of buyouts, the potential for rekindled inflation is a top agenda item for many industry leaders, who had been coming to grips with the elevated cost of taking on and servicing debt.
“Given the strength of the economy and having nothing to do with government, there’s more risk of inflation going up from this point rather than going down or staying where it is,” said David Sambur, co-head of equity at Apollo Global Management Inc. “People rode an epic wave for the last 15 years. I believe that wave crested in 2022 with the spike in inflation and the reset of the cost of capital. The buyout market is still adjusting.”
Having started to cut rates last year, the Fed seems in no rush to lower them more as it waits to see how Trump’s policies on immigration, tariffs and taxes may impact the economy.
While buyout firms have adjusted purchase prices in this environment, the current cost of borrowing — compared with the rock-bottom rates of the boom years — has given them less room to negotiate valuations being sought by sellers in roaring equity markets.
“You rarely have multiples as high as they are today combined with base rates as high as they are today,” said Brian Ruder, co-chief executive officer and co-managing partner at Permira. “It’s a really unique cocktail that, to us, means we have to tread cautiously.”
Return Pressures
Any return to rate rises would put new pressure on private equity firms’ ability to maximize the returns they generate for investors, having just started to outperform private credit.
“If you look at what drove returns over the last 10 years as compared to what will drive returns over the coming decade, investors are appropriately asking how returns are going to be generated in the future based on a quite different range of underlying market variables,” said Sambur.
Dealmakers’ own share of future gains could also be threatened under Trump. The president said last week that he’s prioritizing closing a loophole that allows private equity managers to pay a more favorable tax rate on carried interest—one of their main forms of compensation.
Drew Maloney, CEO of trade body The American Investment Council, said Trump’s tax reform during his first term had encouraged private equity to invest trillions of dollars in the US economy. “We encourage the Trump administration and Congress to keep this sound tax policy in place and unleash more long-term investment that supports jobs, workers, small businesses and local communities,” Maloney said in a statement.
The increased pace of spending by private equity firms that began last year appears to have slowed in recent weeks. The value of private equity acquisitions of US targets rose almost 50% in 2024, outstripping the broader M&A recovery, according to data compiled by Bloomberg. So far in 2025, these volumes are down about 20%, the data show.
To be sure, there’s still plenty of optimism among private equity executives and their advisers that the momentum will return and that Trump’s business agenda will play a part in that.
“If you sort through the noise, we believe this administration will be on balance friendly to business and therefore conducive to dealmaking,” said Chris Egan, managing partner at Advent. “More sellers of businesses are confident they can move forward, do prep work, hire advisers, and get to a successful transaction.”
The ongoing need to return money to investors and put a dent in the industry’s mountain of unspent capital, will also be important catalysts for private equity activity, said Haidee Lee, partner and global co-head of sponsor M&A at Goldman Sachs Group Inc.
“There are over 1,500 portfolio companies that are $1 billion and greater in enterprise value that are going to need to be monetized either through a sale, continuation fund vehicle, an IPO or other type of liquidity structure in the next 12 to 36 months,” Lee said. “We’re at an inflection point in the market where a more meaningful re-balancing between buying and selling is going to take place.”
Regulatory Hawks
Like all dealmakers, private equity executives are waiting to see if any momentum in buying and selling will be boosted or hindered by the Trump administration’s approach to antitrust issues in M&A.
“We’ll see reasonable deal volume this year and anticipate a more traditional antitrust environment,” said Martin Brand, head of Blackstone Inc.’s flagship buyout business.
Initial hopes of a softer touch than that of Joe Biden’s administration, which aggressively went after mergers that it thought reduced choice for the American consumer, were dampened somewhat by the US Justice Department’s move in January to sue to block Hewlett Packard Enterprise’s $14 billion acquisition of Juniper Networks Inc.
Although not a private equity transaction, the decision has given buyout firms pause for thought — especially as US antitrust regulators last year began directing their gaze more on the role of private capital in M&A.
“What’s particularly interesting about having an administration with different views on regulation to the last, is around which areas of consolidation they might try to fight versus embrace,” said Permira’s Ruder, who added that deals like Getty Images Holdings Inc.’s planned acquisition of rival stock-photo provider Shutterstock Inc. would help set the tone.
Advent’s Egan noted that the time between signing and closing deals has been getting longer as regulators become more hawk-like, a dynamic he said “could have implications on our and our competitors’ businesses.”
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