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, U.S. 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.”
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.
“There’s more risk of inflation going up from this point rather than going down or staying stuck 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.”
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.”
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 U.S. 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.”
