In Reuters, Bob Rivollier Shares Insight Into PE Financing

The shift towards more equity financing started before the turmoil in the banking sector this month, as the rise in interest rates over the course of the last year made debt more expensive, and fears about an economic slowdown made lenders more risk-averse.

Private equity partner Bob Rivollier told Reuters that, “many buyout firms that rely heavily on equity financing believe it's possible to achieve the returns they have seen in the past by adding debt to the companies they buy down the road. This has made return assumptions on these deals more precarious.”

"Equity isn't cheap. Between a deal where 40 percent is equity and 60 percent is debt and one where 100 percent is equity, you're going to need a much higher return for the equity deal to get the same overall return to your investors," Bob said.