Private Equity Considers Alternative Deal Structures in a High-interest-rate Environment

Weaver partners Donny Springer, Jennifer Krieger and Sean Muller recently answered frequently asked questions around alternative deal structures in private equity in Pitchbook’s Q2 2024 U.S. Private Equity Breakdown.

How have higher interest rates affected the environment for PE deals?

Deal flows have slowed significantly over the past year, and the rise in interest rates has changed the calculus for how PE deals are structured. Over the past 15 years, when rockbottom interest rates made money seem virtually free, most PE deals were structured with a four- to five-year holding period and a clear exit strategy. The focus among PE firms has been on getting in and out of a deal in a relatively short period of time.

As interest rates have risen, some PE firms have begun looking at alternative deal structures and considering different tax arrangements.

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