Template-Type: ReDIF-Paper 1.0
Author-Name: Fernando Avalos
Author-X-Name-First: Fernando
Author-X-Name-Last: Avalos
Author-Name: Boris Hofmann
Author-X-Name-First: Boris
Author-X-Name-Last: Hofmann
Author-Name: José María Serena Garralda
Author-X-Name-First: José María
Author-X-Name-Last: Serena Garralda
Title: Monetary policy and private equity acquisitions: tracing the links
Abstract: Private equity funds play an increasingly important role in financial systems. Yet, the impact of monetary policy on their activity has been little explored so far. In this paper, we analyse the transmission of monetary policy through private equity (PE) deals, focusing on the impact on: (i) the volume of private equity deals; (ii) the use of leverage; and (iii) the pricing of those deals. We find that contractionary monetary policy shocks to the short end of the yield curve tend to dampen private equity activity, by reducing deal volumes, the use of leverage and deal prices. A credit channel of monetary transmission seems to affect deal volumes and the use of leverage, while a valuation channel appears to drive the transmission to deal pricing. Monetary policy shocks to the long end of the yield curve have weaker effects on PE activity. 
Creation-Date: 2026-01
File-URL: https://www.bis.org/publ/work1326.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1326.htm
File-Format: text/html
Number: 1326
Keywords: private equity, buyouts, monetary policy, credit spreads, equity risk premium
Classification-JEL: G21, G32, F32, F34
Handle: RePEc:bis:biswps:1326