Private equity firms are facing a challenging landscape in 2025. Rising interest rates, tighter lending conditions, and economic uncertainty are creating pressure across portfolios. To stay ahead, firms are turning to restructuring consulting—a critical tool for preserving value, managing distressed assets, and optimizing operations. This year, key trends like alternative insolvency solutions, the demand for specialized restructuring consultants, and shifts in distressed investing will shape how private equity firms navigate financial turbulence.
Why Restructuring is a Must for Private Equity in 2025
Market shifts are making proactive restructuring a necessity. Several factors are driving this urgency:
- Higher Interest Rates: Increased borrowing costs are squeezing leveraged buyouts and limiting financial flexibility.
- Tighter Credit Markets: Traditional lenders are pulling back, forcing firms to explore alternative financing solutions.
- Declining Valuations: Economic headwinds and changing consumer trends are eroding valuations, impacting growth and exit strategies.
- Regulatory Pressures: Heightened oversight of distressed businesses is making traditional bankruptcy proceedings more complex and costly.
As these challenges mount, restructuring consulting is helping private equity firms stabilize struggling assets, optimize operations, and position companies for long-term success.
ABCs: A Smarter Alternative to Bankruptcy
Traditional bankruptcy is often slow, expensive, and harmful to a company’s reputation. That’s why many private equity firms are turning to Assignments for the Benefit of Creditors (ABCs) as a preferred alternative.
Why ABCs Are Gaining Traction
- Faster Resolution: ABCs streamline asset disposition, avoiding the lengthy delays of Chapter 11.
- Lower Costs: The process is significantly less expensive than formal bankruptcy proceedings.
- More Control: Firms maintain greater influence over asset sales and creditor negotiations.
- Reduced Public Scrutiny: Unlike bankruptcy, ABCs are private, minimizing reputational damage.
For firms managing distressed assets, partnering with restructuring consultants who specialize in ABCs can help maximize recovery while avoiding prolonged legal battles.
The Rising Demand for Restructuring Consultants
Restructuring consulting is no longer a niche service—it’s a strategic necessity. Private equity firms are increasingly turning to restructuring specialists to help stabilize struggling companies and drive long-term value.
How Restructuring Consultants Create Value
- Operational Turnarounds: Identifying inefficiencies and improving profitability.
- Debt Restructuring: Negotiating with creditors and optimizing financing.
- M&A and Divestitures: Managing distressed asset sales and carve-outs.
- Crisis Management: Providing expert guidance to stabilize distressed businesses.
With today’s complexity, private equity firms can’t afford to navigate restructuring alone. Expert consultants bring the experience and strategies needed to protect and grow investments.
Trends in Distressed Investing and Alternative Capital
Despite the market uncertainty, distressed investing remains a lucrative opportunity for private equity firms that can identify and restructure undervalued assets. Several trends are shaping this space:
1. Surge in Distressed M&A
With more companies facing financial strain, distressed mergers and acquisitions are increasing. Private equity firms are leveraging restructuring expertise to acquire struggling businesses at deep discounts and unlock turnaround potential.
2. Growth of Private Credit and Alternative Financing
As banks tighten lending, private credit funds and alternative lenders are stepping in to fill the gap. Private equity firms are securing bridge financing, debtor-in-possession loans, and structured equity solutions to stabilize portfolio companies.
3. Industry-Specific Distress Opportunities
Certain sectors are experiencing higher distress levels, creating targeted investment opportunities:
- Retail & Consumer Goods: Shifting consumer behavior is challenging brick-and-mortar businesses.
- Healthcare: Rising costs and reimbursement issues are driving increased restructuring activity.
- Real Estate & Construction: High interest rates and declining property values are creating distressed asset opportunities.
By leveraging restructuring consulting, private equity firms can identify high-potential distressed assets, implement turnaround strategies, and create significant value in these industries.
Is your firm prepared for the challenges and opportunities ahead? Resolute’s restructuring experts help private equity firms navigate complex financial situations, optimize portfolios, and drive long-term value. Contact us today to discuss how we can support your firm’s success in 2025.