Trump Tariffs & PE Deals: Recovery Stalled
- President donald Trump's trade war is hindering a global recovery in private equity dealmaking, reversing earlier projections of increased activity. bain & Company forecasts a 16% drop in...
- The private equity industry initially anticipated a boom under Trump's second term, expecting business-kind policies and eased regulations to end a two-year downturn.However, the uncertainty generated by trade...
- Simona Maellare, co-head of the alternative capital group at UBS, said the market hasn't stopped entirely, but the ability of sponsors to transact has narrowed to sectors less...
Donald Trump’s trade policies are stalling the private equity dealmaking recovery,with a projected 16% drop in buyout values for Q2 2025. The uncertainty surrounding trade adn tax policies has significantly elaborate asset valuation and dramatically slowed dealmaking across the board. This reversal from earlier projections is causing investors to shift focus toward tariff-resilient assets,notably in service-heavy sectors,as customary exit strategies falter. A lack of exits is also reducing funds available for new commitments, creating intense competition for firms raising new funds, according to insights sourced by news Directory 3. How will the private equity industry navigate these headwinds and adapt to meet investor demands? Discover what’s next …
Trump Trade War Slows Private Equity dealmaking Recovery
President donald Trump’s trade war is hindering a global recovery in private equity dealmaking, reversing earlier projections of increased activity. bain & Company forecasts a 16% drop in the value of buyout fund deals for the second quarter of 2025 compared to the first three months. April saw a 24% decrease from the first quarter’s monthly average.
The private equity industry initially anticipated a boom under Trump’s second term, expecting business-kind policies and eased regulations to end a two-year downturn.However, the uncertainty generated by trade and tax policies has stifled this resurgence, complicating asset valuation and slowing dealmaking except in the most protected sectors.
Simona Maellare, co-head of the alternative capital group at UBS, said the market hasn’t stopped entirely, but the ability of sponsors to transact has narrowed to sectors less vulnerable to tariffs.
An executive at a large U.K. private equity group noted that Trump’s tariff announcements in April, some of which were later delayed or reduced, caused a significant loss of confidence in new U.S. deals for the medium term.
The value of assets fully or partially sold by buyout funds is also projected to decrease by 9% in the second quarter.
These figures highlight the challenges facing the private equity industry. A lack of exits from portfolio companies in recent years has reduced the funds available to conventional investors like pension funds and endowments for new commitments. Bain & Company reported that no buyout fund closing in the first quarter raised more than $5 billion, a first in a decade.
With fewer distributions to investors and difficulty deploying committed capital,firms raising new funds face intense competition. Bain & company estimates that new vehicles across alternative asset management,including real estate,credit investments,and traditional buyout funds,are seeking $3 from potential investors for every $1 available,the highest imbalance as at least 2011.
Jan-Hendrik Horsmeier, a partner at Clifford Chance, said that while optimism was high in January, investors are now focusing on service-heavy assets less affected by trade barriers.
After two and a half years of valuation disruptions due to rising interest rates and borrowing costs,private equity firms struggle to exit investments through IPOs or full sales. A March poll by Bain & Company and the Institutional Limited Partners Association revealed that investors in private equity funds are increasingly dissatisfied with partial exits, preferring conventional full exits even at lower valuations; over 60% favored this approach.
What’s next
The private equity industry will likely continue to adapt by focusing on sectors less vulnerable to trade tensions and exploring alternative exit strategies to satisfy investor demands for full returns.