Good morning, Hubsters. MK Flynn here in New York with the US edition of the Wire.
While folks in the UK are enjoying a bank holiday today, in New York, many families have returned from vacation after a school break. As PE pros get back into the swing of things after the Passover and Easter holidays, I’m devoting today’s newsletter to PE Hub’s recent coverage of how dealmakers are navigating the uncertainties in today’s market.
Last week, PE Hub teamed up with our PEI Group colleagues from Buyouts, Private Equity International and Secondaries Investor to publish a special report on the private equity industry’s reaction to tariff turmoil. The report is based on dozens of interviews we conducted with PE pros on and off the record over the first half of April. We also teamed up on a special podcast, featuring myself and the other editors sharing our conclusions based on our reporting.
I’ve been particularly struck by how - in stark contrast with the volatile, near-instantaneous reactions seen in the public markets - the prevailing approach from private equity professionals is “wait and see.” This is a moment when the term “patient capital” seems especially apt.
While folks acknowledged the deal doldrums are likely to be prolonged, many of them also spotted silver linings beyond the storm clouds.
In that vein, today, I’m going to keep things short and sweet and highlight, below, a few comments that show where windows of opportunity might be opening up.
Bright spots
Throughout our report on tariff turmoil, sources pointed out that period of dislocation for the public markets are often when private capital shines. Whether these sentiments express wishful thinking or fundamental truths about the asset class, I’ll leave it to our readers to decide.
Here are some of the opportunities PE pros told us about:
David Sambur, co-head of equity, Apollo Global Management: “We see this as an emerging buying opportunity across various asset classes given the dislocation across equity and debt.”
Richard Hope, head of EMEA/co-head investments, Hamilton Lane: “We are leaning into secondaries, parts of credit, infrastructure, localized real estate and small, localized buyout. These are all areas where we see opportunities in this environment.”
Tom Tuttle, Liam Rogers, managing directors, Kinderhook Industries:
“We’re seeing increased attractiveness in targets with domestic supply chains, flexible sourcing strategies, or the ability to pass through costs – these businesses are better positioned to weather the current environment and may command premium valuations as a result.”
Beatrice Mitchell, co-founder and MD, investment bank Sperry, Mitchell & Co:
“Buyer interest in small to mid-sized private companies remains high and there remain unprecedented amounts of capital available for acquisitions.”
The “U-word”
For more on how the private equity industry is reacting to today’s environment, tune into a special edition of PEI Group’s Spotlight podcast, “How tariff turbulence is hitting private markets.”
The ‘U-word’ has well and truly returned to private markets. Uncertainty has dominated conversations the first half of April, as the back-and-forth tariff announcements have deepened the pause in dealmaking.
For the private equity industry, the trade war adds unwelcome distractions to an industry already grappling with challenges including lower distributions, higher interest rates, a difficult fundraising environment, consolidation and fundamental changes.
In this episode, editors from PEI Group’s various titles covering the M&A market, deals, secondaries, LP insight and GPs analyze the private equity industry’s response to the tariffs and volatility, where the challenges and opportunities lie, and what market participants are keeping their eyes on.
In this episode, hear insights from:
- Adam Le, senior editor, EMEA, private equity, PEI
- Mary Kathleen Flynn, editor-in-chief, PE Hub
- Graham Bippart, senior editor, Buyouts and Private Funds CFO
- Madeleine Farman, editor, Secondaries Investor
As promised, I’m keeping the Wire short and sweet today.
Tomorrow, Craig McGlashan will be back in the Europe chair, and I’ll be with you again in the US.
All the best,
MK
