As of this Thursday, private-equity-backed firms are demonstrating resilience in the face of rising interest rates, largely due to robust financial management by their affluent owners. Despite a few notable bankruptcies such as Envision Healthcare Corp. following its acquisition by KKR & Co (NYSE:KKR)., default rates have managed to stay below those seen during past crises and at the onset of the pandemic.
The bankruptcy of Envision Healthcare Corp., which occurred post-acquisition by KKR & Co., stands as a significant event in the private equity landscape. Yet, it has not significantly affected the overall default rates among private equity-backed firms. These rates continue to be lower than those experienced during previous crises or at the beginning of the pandemic.
This resilience among private equity-backed firms can be attributed to strong financial management from their wealthy owners. This robust management has enabled these companies to withstand the pressure of rising interest rates.
In conclusion, while private equity investors are seeing reduced returns due to soaring interest rates, without a deep recession, the situation is less concerning than what was initially anticipated. The endurance of these firms amidst economic turbulence highlights the importance of robust financial management and underlines the stability within this sector of the market.
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