Exits Are More Sensitive to Interest Rates Than Buyouts

The Federal Reserve has begun cutting interest rates, shifting from monetary tightening to easing, as inflation slows and the US economy softens. While dealmakers have been anticipating that lower rates will spur M&A activity, recent research from Value Add suggests that buyout activity tends to actually decline as interest rates fall, highlighting that borrowing costs are only one of many factors affecting private markets. This week, we’ll explore how exit activity responds to changes in interest rates, revealing a notable contrast in how buyouts and exits react to shifting monetary policy.