Becker Private Equity & Business Podcast
Private Equity in Transition: Market Shifts, Growth Strategies & Fiscal Headwinds with Matt Wolf of Elliott Davis 5-27-25
27 May 2025
In this episode, Matt Wolf, Valuation Leader and Healthcare Senior Analyst at Elliott Davis, unpacks how higher interest rates, global financial uncertainty, and a shift away from traditional add-on acquisitions are reshaping private equity strategy, especially in the healthcare and lower middle markets.
Full Episode
This is Scott Becker with the Becker Private Equity and Business Podcast. Today, we're visiting with Matt Wolfe. Matt is a brilliant leader at Elliott Davis. He watches the healthcare area closely and just a really gifted person. Matt, what are you watching currently? What's going on in the private equity and healthcare space? What are you watching?
A lot, I guess. I'm not even sure exactly where to start. Like many people, I started to watch treasury auctions and pay attention to those. Just, I guess, overall, the level of
uncertainty in global financial markets as bond investors assess in various governments, including the US's ability to pay for their obligations and what that's doing to interest rates and what that's doing to cost of capital. And I think for private equity, what is really interesting, and I think we'll have some interesting deal flow implications is
You know, certainly interest rates will remain higher for longer, which I don't think is news to many. But, you know, as we look into the actual what that means for the operation of these strategies, you know, I talk to more and more sponsors who are are doing the math, doing the analysis and saying, you know, the the the add on game. is less appealing.
Certainly we'll do add-ons when it makes sense, maybe for a capability rather than a geography or something, but we're looking for de novo growth. And I'm really watching what that means on the lower middle market as the demand for some of these businesses, especially even founder-owned businesses, reduces. And that will continue to bring multiples down
And I think that'll create challenges for folks looking to exit in the middle market, but particularly in the lower middle market, a lot of founder-owned businesses, older Gen X, baby boomers looking to retire from the business they built over 40 years, not getting the multiple they were looking to get, might have implications on downstream healthcare demographic trends and ability to spend for senior care, things like that.
this global going from 100,000 feet down to 10,000 feet, but really looking at the interplay of the global financial uncertainty, what that means for rates in the U.S., and how that's playing out in real time as sponsors evaluate add-on acquisitions versus de novo.
And this is going to have effects on the wealth transfer, the so-called silver tsunami in the U.S., and it's really – there's a lot going on, and it's a very – Very interesting time, I guess, to be a private equity sponsor trying to navigate all of this.
Right. I mean, there's so many things there that you just started to unpack, and they're fascinating. One is that the era of add-ons, what I've seen over the last several years is add-ons have been just more and more challenging for more and more investors, private equity funds, as interest rates have been up.
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