In a new Law360 article, Thompson Coburn partner Nathan Viehl examines how tariffs are escalating challenges within the private equity sector. He outlines the strategies firms are adopting to navigate these turbulent times, with a specific focus on legal considerations that can help mitigate risks.
“The private equity industry has weathered significant interest rate volatility in recent years. Higher interest rates have directly affected deal economics in several critical ways,” wrote Nathan. “The increased cost of leveraged capital has substantially reduced potential returns on investments, creating a challenging environment for achieving traditional private equity benchmarks.”
The current economic climate is especially concerning due to the convergence of high interest rates and tariff policies. Nathan explains, “While the industry has been operating under the expectation that interest rate cuts would provide relief in 2025, the introduction of new tariffs threatens to upend this timeline by potentially fueling inflation.”
For private equity firms, tariffs add another layer of complexity to an already demanding investment landscape. “This new dimension requires enhanced due diligence, more-sophisticated scenario planning and greater operational flexibility,” he wrote.
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