Becker Private Equity & Business Podcast
Private Equity Outlook Mid-2025: Cautious Optimism, Credit Concerns, and Tax Talk with Rick Kes of RSM 5-20-25
Tue, 20 May 2025
In this episode, Rick Kes, Partner at RSM, joins Scott Becker to share the latest insights on private equity deal flow, credit market uncertainty, and what proposed tax reforms could mean for investors.
Chapter 1: What insights does Rick Kes share about private equity trends?
This is Scott Becker with the Becker Private Equity and Business Podcast. We're thrilled today to be joined by Rick Kess. Rick is a partner at RSM. RSM is the preeminent sort of mid-market private equity consulting accounting leadership firm. Just a fantastic job they've done in building the practice over a long period of time. Rick joins us regularly to talk to us about trends.
He's watching the private equity business. Rick, let's get to it. What is going on in the private equity business today? Are deals starting to happen again? What are you seeing?
Chapter 2: What is the current state of deal flow in private equity?
Yeah, I mean, Scott, I think, you know, kind of unfortunately, much of the same as we've been talking about for the last couple of months. You know, I think there's a lot of interest and opportunity out there. But with all that interest and opportunity, there's also, you know, a fair amount of uncertainty there.
in different sectors especially you know obviously i cover health care the closest you know there's some uncertainty there uh with some of the budget reforms that are being discussed so you know i think you know there's a lot of interest a lot of opportunity a lot of you know a lot of excitement um you know a lot of dry powder but you know a lot of things that are kind of holding people back in terms of moving forward but you know i'm i'm hoping that you know as the temperatures continue to rise that
Some of that uncertainty sort of, quote unquote, melts away and, you know, that we start to move forward with some deal activity here in the next, you know, two to four months or so.
Chapter 3: How does credit downgrade affect private equity?
Let me ask you a question. On Friday, Moody's reported that they downgraded the U.S. 's credit a little bit, you know, not to the 600s or the 500s like a personal opinion. debt score or credit score, but from AAA to AA1, what impact will that have on interest rates and the interest rate environment in the long run? Or is it not really relevant for the private equity environment?
Or will that have an impact on interest rates and what we see?
Yeah, it's hard to say, but I think one of the last episodes, you and I talked a little bit about the credit market and access to credit and even well-capitalized, highly-rated organizations were having some concerns accessing the debt market. I think this probably just adds some more, again, for the lack of other words, the proverbial uncertainty as it relates to access to credit.
And I think credit is such an important vehicle for private equity to use to leverage where they're going to do a buyout or what have you. But on the other end, a lot of deals are being executed today using credit
other alternatives whether it be rollover equity or other things to kind of capitalize some of the transactions so you know i think it could have some impact uh the impact is on i guess it's a little hard to predict per se but i'd say i think to me the biggest concern would be the access to to further liquidity for some of these deals that we're hoping to finance
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Chapter 4: What are the implications of recent tax discussions?
Chapter 5: What concerns do investors have regarding access to credit?
And I think credit is such an important vehicle for private equity to use to leverage where they're going to do a buyout or what have you. But on the other end, a lot of deals are being executed today using credit
other alternatives whether it be rollover equity or other things to kind of capitalize some of the transactions so you know i think it could have some impact uh the impact is on i guess it's a little hard to predict per se but i'd say i think to me the biggest concern would be the access to to further liquidity for some of these deals that we're hoping to finance
Thank you. I know the House is working through a major sort of tax and budget bill. President Trump says it'll be the greatest tax bill of all time. That might be hyperbole. I'm not an anti-Trump person, not a pro-Trump person, somewhere in between. I know I can't be too critical of it because my podcast might get shut down. I say that jokingly. That's a joke for our audience.
But Rick, what are people starting to say about the discussions in the tax bill that Is it too early to tell or are people starting to digest that at firms like RSM and trying to understand the impact?
Yeah, we had a call this morning with all the partners of the firm, just listening to some of the perspectives that our Washington national tax leaders have. And I think there's some discussion in the bill related to a lot of the things extending what the tax cuts and jobs acts did in the previous Trump administration. So some of those things would be kind of
I would say sometimes positive from a tax perspective to some of our clients. I think there'll be some changes potentially to the interest deductions. Currently, some of the interest deductions are limited or capped at a certain level for different businesses. You know, some of those things I would say are what we're hearing are probably, you know, somewhat business friendly.
But obviously, you know, for every push, there's a pull, so to speak, in the tax bill. So, you know, from, again, back to the health care ecosystem, you've got, you know, some negative impacts with Medicaid and some other issues. you know, potential changes to, you know, subsidies for ACA plans or exchange products that are offered to people that buy their own insurance.
So, you know, there's some good and some bad from all those perspectives. But, you know, I think all in all, you know, I'd say for the first in particular in the non-healthcare ecosystem, it could be more positives than negatives within the tax bill currently structured.
Thank you. And take a second, as we get to the second half of the year almost, it's amazing. What are you most focused on and excited about as we get to the second half of the year, Rick?
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