Private equity firms are slowing new deal activity and concentrating on portfolio management as recent US tariff measures and macroeconomic volatility cloud valuation clarity.

Industry executives say the market has entered a cautious phase, with some previously anticipated M&A transactions postponed. Apax’s planned £4bn sale of insurance firm PIB and 3i’s auction of Audley Travel are among those now delayed. Buyout groups are watching the progress of Reckitt’s multibillion-dollar carve-out closely, with at least one bidder recently lowering their offer.

“There is a pause… it’s hard to price things,” said a senior executive at a leading US buyout firm. “Private equity will go really risk off for a while.”

Nonetheless, selective activity continues. Silver Lake recently secured a majority stake in chipmaker Altera, and KKR acquired E45 skincare brand Karo Healthcare.

With investors expecting capital to be returned and $1.2tn of dry powder to be deployed, the industry is adapting. Many firms are prioritising value creation across existing portfolios. Partners Group, for instance, is actively working with businesses facing Chinese tariff exposure to diversify supply chains and mitigate risk.

Private equity firms are also exploring liquidity options beyond traditional exits. Continuation vehicles remain a popular solution to extend value realisation timelines and bring in new investors.

While market conditions remain in flux, the sector continues to demonstrate resilience and a long-term focus on strategic asset management.

Source: Financial Times