On April 14, 2025, Accordion’s CEO & Founder Nick Leopard appeared on Bloomberg TV to discuss the impact that the tariffs are having on private equity-backed companies that expected a deal-heavy market in 2025.
On the deal flow landscape
Many of us were expecting deal flow to pick up in 2024, and when it didn’t, 2025 looked like it would be the year. Now, given that the only certainty in the market is uncertainty, nobody knows for sure when dealmaking is making its comeback.
But while we don’t have a crystal ball, we do have a good view that it will pick up in the back half of this year—which means companies need to get exit ready now.
“LPs are looking for companies to exit, as these are some of the longest hold periods that we’ve ever seen in private equity. There’s more dry powder than ever that needs to be put to work, and a ton of pent-up demand just to get back to dealmaking.”
To ensure our clients are ready to meet the moment, we’re advising them to do two things right now: conduct a tariff impact analysis and implement sound liquidity management strategies.
On the importance of liquidity management
There’s been pressure on companies to prioritize liquidity for a while—and it’s only mounting. The average hold period is longer than six years right now (compared to the typical three to five), which means LPs are eager for returns. At the same time, sponsors are looking for LPs to commit to new funds, even with their coffers already full of dry powder.
“Right now, the private equity funds we’re working with are focused on what we can do right now from a value creation standpoint: focusing on quick-wins and navigating this rocky time so they’re at the ready when the market comes back around.”
But in an economy where the word ‘recession’ keeps getting thrown around, how can companies successfully show sound liquidity management? The key is looking at their business and asking, ‘How can we free up cash?’.
“This means divesting from non-core assets, optimizing AR/AP processes, and evaluating ways to leverage automation for efficiency. And when it comes to sourcing and tariffs, it means thinking about where they’re sourcing products from, analyzing vendor contracts, conducting tariff impact assessments, and mapping out strategies to navigate uncertainty.”
On navigating tariffs
On the operational side, both public and private companies are going to have to really focus on sourcing. They need to ask questions like, ‘Is reshoring really a possibility?’, and, ‘What are alternatives to China?’ Argentina, for example, could end up being a potential tariff-free sourcing option.
Some sponsors are also playing out ‘what if’ scenarios (‘if tariffs go to X, then we’ll do Y’) and ensuring their partners are ready to tackle whatever scenario comes their way. And ultimately, they’re looking for tariff exemptions: for example, if more than 20% of a product is made in the US, they might be able to claim it as exempt.
“Companies are getting more and more creative when it comes to labeling things as ‘Made in America’ to forego the tariffs. They’re getting creative in what they can control vs. what the broader decision-making body can control.”