Our recent survey of 164 private equity executives revealed improved confidence in both the M&A environment over the next twelve months as well as the exit activity emerging from that. Digging further, we see several interesting dynamics about their financing partners and the current strategies employed to maximize deployment and valuations. 

As we’ve noted in the past, “relationships” and “speed and certainty” remain the top priorities for GPs when selecting private capital providers. Amid the see-saw elements of tariffs, rates and other macro issues, this is critical to ensure sellers have confidence their chosen buyers can close. Doing the last deal, and the familiarity with the sponsors’ credit agreement requirements, is often key to winning the next deal. 

“Price/terms” was the third most popular consideration. This is important for investors to understand why private credit spreads and financial covenants are stickier than those of liquid alternatives. When headline risks force public credit to the sidelines, or (in a frothy market) push yields lower and loosen terms, investors become challenged.