Trends and Strategies
An Economy Moving Forward, Unevenly
The services sector show growth while manufacturing sees softer demand
The U.S. economy is still pulling in two different directions. Manufacturing remains weak, with the ISM Manufacturing PMI around 48 in December, another month below the line that separates growth from contraction. PMI readings are straightforward: numbers above 50 mean activity is generally growing, while numbers below 50 mean it’s shrinking. Factory managers continue to report soft demand, fewer new orders, and ongoing efforts to burn off inventory rather than invest in new capacity. There’s…
PIK and Preferred Equity Financing Structures: Balancing Flexibility with Risk
The Rise of Non-Cash Pay Capital Structures In an environment where interest rates remain elevated and exit timelines have extended, private equity sponsors are seeking new ways to balance liquidity needs against operational realities. As a result, Configure has observed an increase in non-cash pay capital structures. Payment-in-kind (PIK) instruments, holdco PIK structures, and preferred equity solutions have increased in prominence. These structures share a common thread: they allow sponsors to raise capital while preserving…
Deloitte: PE Loves AI
A new national survey from Deloitte shows that 86% of corporate and private equity firms have adopted generative artificial intelligence in their M&A workflows, with most respondents expecting to increase related investment over the next 12 months. The new survey, Deloitte’s first-ever 2025 GenAI in M&A Survey, gathered responses from 1,000 senior investors across major U.S. industries. Among respondents, 83% have invested $1 million or more into generative AI for M&A use cases, with 88%…
A Rose by Another Name: McCarthy Capital Rebrands as M-One
Middle-market-focused McCarthy Capital has rebranded as M-One Capital. The Omaha-based firm’s new name reflects its ongoing focus on backing founder- and management-led businesses, while signaling a broader investment approach across sectors and regions. McCarthy Capital was founded in 1986 as a fundless sponsor, making majority and minority investments of less than $10 million in smaller, regional companies. It has evolved into an institutional platform with a broader investment approach across sectors and regions. Today, M-One…
The 401(k) Revolution: Private Equity’s Boom or Bust Moment?
he idea of integrating private equity (PE) into 401(k) plans is back in the spotlight, and the question isn’t just can it be done, it’s should it be done, and who will choose it? The U.S. government has signaled that it is open to allowing these investments within defined contribution plans. But even if regulators open the floodgates, a chain of hurdles remains: Retirement plan administrators must decide if they’ll permit private equity funds on…
M&A Market Trends: How AI Is Shaping Deal Activity
Artificial Intelligence (AI) has emerged as a key strategic focus across industries, regardless of their size or domain. Amid a challenging dealmaking environment marked by uncertainty and volatility, AI has been a rare bright spot, spurring significant M&A activity. According to Dealogic, the number of U.S. M&A transactions is down approximately 18% year-over-year. However, a considerable percentage of the deals that are taking place are fueled by AI. This reflects a critical shift in how…
BGL: Power-Hungry AI Drives Cooling Consolidation
A new report from Brown Gibbons Lang (BGL) shows that strong demand for data‑center cooling, power management and instrumentation has positioned the HVAC‑equipment sector for consolidation. Driving the surge, the report notes that exponential data‑center growth—fueled by AI and emerging technologies—is generating a significant need to displace heat. As future power requirements increase, so does the need for innovative, energy‑efficient cooling solutions. Advanced technologies such as liquid cooling, low‑PUE (power usage effectiveness) systems, instrumentation and…
PSP’s PE Portfolio Yields 17% Return in 2025
PSP Investments, one of Canada’s largest pension investment managers, has reported a 12.6% one-year net return for its fiscal year ending March 31, 2025. According to PSP, its results were driven by strong performances across infrastructure, private equity, public market equities, and credit investments. Over a five-year horizon, PSP achieved a 10.6% net annualized return, and over ten years an 8.2% annualized return, outperforming its Reference Portfolio by C$31.9 billion over the last decade. The Reference…
BCG: Private Equity Infrastructure Investment Gains Momentum
Private equity investment in infrastructure is showing renewed strength as macroeconomic uncertainties stabilize, according to the latest Infrastructure Strategy 2025 report by Boston Consulting Group (BCG). According to BCG, the private infrastructure market, which has navigated fluctuating deal volumes in recent years, reached an all-time high of $1.3 trillion in assets under management as of June 2024, a strong indicator of investor confidence in the asset class. Although fundraising remains below its 2022 peak, infrastructure…
Private Equity on the Rebound
A global private equity (PE) revival is taking shape as dealmaking gains traction, though sluggish fundraising continues to present challenges, according to Bain & Company’s 16th annual Global PE Report. The report highlights a resurgence in both buyout investments and exits, reversing the sharp declines of the previous two years. Private equity investment values surged 37% year-on-year to $602 billion in 2024, excluding add-on deals, fueled by pent-up demand from general partners (GPs) eager to…
M&A and JV Activity in Private Credit: What the Trend Could Mean for Borrowers
The State of the Game The private credit arms race has taken the industry landscape by storm, with Ken Moelis citing the shift as the “greatest change in the history of transactional finance.”[1] Already enjoying years of measured growth, when banks and the broadly syndicated loan market stepped back from lending in 2023 due to market volatility, private credit stepped up, cementing private credit’s position as a force in financing markets. This has created a…
Are M&A Deal Parties Turning Away from Reps & Warranties Insurance?
RWI usage is declining[1] for deals closed in 2024, including among Private Equity buyers.[2] When an M&A deal requires more carveouts for things like survival periods and caps and special escrows to cover RWI policy exclusions and limitations, deal makers are reevaluating the structure and cost of indemnification. Additionally, RWI may not provide a safety net expected by the sellers. The Bottom Line Deal parties have learned from the data that using RWI can add…
The Evolving Playbook: Expert-Led Operational Enhancements in Private Equity
Over the years, private equity has shifted from a focus on leverage and financial engineering to an ever-increasing emphasis on creating value through operational improvements within their portfolio companies. This shift includes enhancing management practices, investing in technology upgrades, and creating new sources of revenue. As market conditions grow more competitive and complex, the ability to drive value through operational improvements has become a key differentiator in achieving superior investment returns. In many ways, creating…
