Private Equity Faces Investor Pressure Amid Tariff Uncertainty, Slowed Dealmaking

In 2025, private equity faces significant challenges as rising interest rates and tariff policies under President Donald Trump have disrupted the sector's traditional operating model and dealmaking momentum. The increased cost of borrowing pressures leveraged buyouts, forcing firms to rely on financial engineering and debt restructuring, which may not be sustainable long-term. Despite a strong start to the year with notable deals and exits, uncertainty around tariffs and market volatility has led to a slowdown in deal activity and IPO exits by midyear. Private equity executives are now focused on convincing investors to remain committed to the asset class amid these headwinds, with the industry returning to a more niche status. Meanwhile, some accounting firms resist private equity ownership, valuing their independence and client trust over potential financial gains, reflecting broader wariness about private equity's impact on fees and firm culture. Transparency, governance reforms, and adapting to a changing investor base are increasingly emphasized as critical for private equity's future viability.