Key Takeaways

66% of PE firms globally expect increased scrutiny from antitrust, FDI and other regulatory authorities to have a negative impact on their dealmaking plans over the next 12 months.

  • Rising regulatory scrutiny continues to be a concern for many PE firms due to the increasing focus on competition issues globally.
  • This heightened focus on competition issues is evident globally, with notable developments in the U.S., Europe and the Asia-Pacific region, prompting firms to address antitrust considerations early in the transaction process.

Rising regulatory scrutiny continues to be a concern for many PE firms. Indeed, while regulation may not be the top issue for many respondents to this survey, it is a consideration that consistently ranks highly in their list of concerns. One crucial aspect of this is the increasing focus on competition issues in many areas of the world. In the U.S., for example, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) Antitrust Division have broadened the scope of investigations to include novel antitrust theories, such as the harm a merger may cause on labor markets.

In addition, U.S. antitrust agencies have developed new requirements for antitrust filings that could substantially add to the burden and timing of obtaining antitrust clearances. The Dechert Antitrust Merger Investigation Timing Tracker (DAMITT) found the average duration of significant investigations in the U.S. ticked up to 11.0 months during the first half of 2024, from 10.6 months for 2023.

“Early preparation and planning for antitrust scrutiny has to start with the transaction agreement,” suggests Rani Habash, Dechert partner, antitrust. “Antitrust risk-shifting provisions can be tailored to enable buyers and sellers to limit risk according to their appetite.”

In Europe, several national competition watchdogs have expanded their remit within recent years. “National enforcers in the EU are as active as ever,” says Clemens York, Dechert partner, antitrust. “The complexities of European merger approval (including the possibility of referrals to and from the European Commission) need to be adequately reflected in the deal documents.”

In the Asia-Pacific region, a new competition regime has come into force in Australia, with India, China, Indonesia and Taiwan all making significant changes to their antitrust regulations. The result is that PE firms are now having to think about antitrust issues in a much broader range of potential transactions – and often at the very outset of a deal.

People are spending more time either preparing for or looking at antitrust much earlier than they have in the past. There are deals where the first call that people make is about figuring out the antitrust sensitivities.” Markus Bolsinger, co-head of Dechert's private equity practice
People are spending more time either preparing for or looking at antitrust much earlier than they have in the past. There are deals where the first call that people make is about figuring out the antitrust sensitivities.” Markus Bolsinger, co-head of Dechert's private equity practice
People are spending more time either preparing for or looking at antitrust much earlier than they have in the past. There are deals where the first call that people make is about figuring out the antitrust sensitivities.” Markus Bolsinger, co-head of Dechert's private equity practice

Concern is particularly marked from respondents in the Asia-Pacific region – with 75% worried about more scrutiny to come. Meanwhile, over two-thirds (69%) of EMEA respondents feel that greater scrutiny will have a negative impact on dealmaking plans.

In North America, 60% of PE firms fear their deals could be negatively affected by antitrust scrutiny. That the figure is lower than in other regions may reflect uncertainty over the outcome of the presidential election, since this research was conducted before the result was known. But regulation is certainly ramping up in the region. Canada has recently completed a wave of amendments to its competition law that fundamentally changes its landscape. In the U.S., high-profile antitrust inquiries into leading technology companies have been announced or rumored; and in the healthcare sector, antitrust authorities have expressed skepticism of PE ownership of healthcare entities and even launched a lawsuit against at least one PE firm for its alleged involvement in developing a provider roll-up strategy.

This is not to suggest that antitrust regulation is always a headwind for the PE sector. Indeed, 17% of respondents expect increased competition scrutiny to have a positive impact on their firm’s dealmaking plans. It may be that these firms expect less competition from larger buyers for certain assets; moreover, where competition inquiries lead to divestments or break-ups, PE buyers are often in a strong position to step in to make acquisitions – potentially at attractive prices.

Footnotes

The preceding article is an excerpt from the 2025 Global Private Equity Outlook report, an annual publication that uses qualitative and quantitative findings to look at current PE industry trends and views on where the market is heading in 2025.