Buyout barons’ checks will be signed by the masses

TPG

21/10/2025 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Pranav Kiran

TORONTO, Oct 20 (Reuters Breakingviews) - Private equity has a scale problem. Buyout barons depend on pairing debt with equity checks stumped up by fund backers. A lean M&A season starved those investors of cash, muting fundraising. Everyday Americans may soon supplement them. Collectively, they could fuel bigger and bolder repeats of equity-rich take-privates like $55 billion Electronic Arts EA.O or a potential deal for $16 billion Hologic.

The number of publicly-listed U.S. companies has halved since the mid-1990s. As more money chases fewer targets, the average buyout size doubled over the last decade, according to Preqin data. Meanwhile, traditional backers like pension funds and endowments are pulling back from private equity because it’s taking longer – now over six years – to recoup their investments.

This crunch comes just as a long-dormant M&A market revives. Blackstone BX.N and TPG TPG.O could announce a take-private of diagnostics firm Hologic HOLX.O as early as this week, the Financial Times reported. Video-game maker Electronic Arts agreed to the largest buyout ever. Both will require a lot of cash. In Hologic’s case, a 15% premium to its unaffected share price could require funding over 50% of an offer with equity, using typical leverage assumption, Breakingviews calculates. Similarly, Silver Lake Partners and the Saudi Arabia Public Investment Fund must stump up an incredible $36 billion in equity for the developer of “The Sims.”

This tracks a long-running trend. On average, debt now accounts for 35% of the capital structures of acquired companies, down from 60% in 2013, according to KKR research.

Buyout firms have typically asked others to chip in to fill the gap. Really big investors – like, say, Saudi’s PIF – can be coaxed into contributing to buying an asset directly. Private equity peers can also band together. However, as other asset classes drag away more dollars, finding such partnerships is tougher.

Individual investors are the new untapped wellspring. “Everyday” millionaires with investable assets of up to $5 million hold $107 trillion in wealth globally, according to UBS. They have already poured into retail-focused mega-funds, like Blackstone’s $53 billion real estate-focused BREIT or $14.2 billion private equity vehicle BXPE. Bain estimates that they could account for a quarter of the industry’s asset growth over the next decade.

These funds tend to be open-ended, raising money without a set end date and building tempting war chests. BXPE, for instance, invests alongside Blackstone’s traditional buyout vehicles. Already, such private-wealth focused funds hold more than $400 billion in assets, according to PitchBook.

President Donald Trump is further opening the floodgates, signing an executive order to allow the $13 trillion in employer-sponsored defined-contribution plans to invest in private assets. Blackstone last week set up a team to tap retirement savers. The question of scale is ever-more pressing. The masses may provide the answer.

CONTEXT NEWS

Private equity firms Blackstone and TPG are nearing a deal to buy medical diagnostics company Hologic and could announce the plan as soon as this week, the Financial Times reported on October 17, citing unnamed sources.

Videogame publisher Electronic Arts agreed to be acquired by a consortium led by the Saudi Arabia Public Investment Fund, Silver Lake Partners and Jared Kushner’s investment firm Affinity Partners on September 29. The deal values the company at $55 billion including debt.

Buyout deals have ballooned https://www.reuters.com/graphics/BRV-BRV/gdvzbxqaavw/chart.png

Private equity fundraising has slipped https://www.reuters.com/graphics/BRV-BRV/myvmxzoyapr/chart.png

Buyout deals have ballooned https://www.reuters.com/graphics/BRV-BRV/gdvzbxqaavw/chart.png

Private equity fundraising has slipped https://www.reuters.com/graphics/BRV-BRV/myvmxzoyapr/chart.png

(Editing by Jonathan Guilford; Production by Maya Nandhini)

((For previous columns by the author, Reuters customers can click on KIRAN/pranavkiran.t@thomsonreuters.com))