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Donald Trump’s trade war has denounced the brakes on the global trade recovery of the private equity industry, with new forecasts showing that the much-anticipated increase in trading has been reversed since the US President’s “liberation day” tariff announcement.
The value of buyout funds to buy the company in the second quarter is expected to fall 16% from the first three months of 2025, according to forecasts from consulting firm Bain & Company. April figures fell 24% on the monthly average for the first quarter.
The private equity industry wanted a boom in trading under the second Trump administration. A more business-friendly attitude and relaxation of regulations was expected to end the sector’s two-year recession.
But instead, the uncertainty unleashed by Trump’s trade and tax policies has made it impossible to shorten the revival, cherish many assets and slow down all transactions other than the most insulated sectors.
“We are pleased to announce that Simona Maellare, co-head of UBS’s Alternative Capital Group,” said:
Executives of the large UK private equity group said Trump’s tariff announcement was made in April, some of which were later delayed or diluted, leading to “a massive withdrawal of trust in new deals in the US, at least in the medium term.” “I don’t know if that’s a lot of what Trump intended,” the executive added.
The value of assets sold fully or partially in shopping funds is also on a trajectory of 9% decline in the second quarter.
The data highlights the challenges of increasing the private equity industry years after a lack of exits from portfolio companies left less money to commit traditional supporters such as pension funds and donations to new funds.
For the first time in a decade, the acquisition fund, which closed in the first quarter, had not raised more than $5 billion in capital, Bain said.
The struggle to develop the already committed “dried powder” by buyout funds with less distribution to investors means that companies seeking to raise funds for new funds have fallen into fierce competition for each available amount.
According to Bain, new vehicles in alternative asset management, including real estate, credit investments and traditional acquisition funds, are seeking $3 from potential investors for every dollar in supply.
That imbalance is at the highest since at least 2011, the consultant added.
“Everyone was very optimistic and a lot was going on in January,” said Jan-Hendrik Horsmeier, a partner at law firm Clifford Chance.
Investors have now shifted their focus to “service-rich” assets that are less susceptible to trade barriers, Horsmeier said.
Two and a half years after the valuation was postponed due to a rapid rise in interest rates and rapid rise in borrowing costs, private stocks struggled to withdraw their investment through the traditional channels of initial public sales or full sales.
Investors in private equity funds voted by Bain and the Institutional Limited Partners Association said in March that they were increasingly unhappy with dealers who are only partially leaving portfolio companies, for example, through the sale of minority shares.
Over 60% of investors said they wanted to see a full exit for traditional companies, even if it meant selling at a lower rating.
