USA – CALIFORNIA Trends and Developments Contributed by: Vijay Sekhon, Mehdi Khodadad, Nicolai Schwarz-Gondek and Payom Pirahesh, Sidley Austin LLP
programmes and large asset managers in co-investment transactions. On the sell side, Payom counsels target companies – including founder- owned businesses – through sales to sponsors and other sophisticated acquirers.
Sidley Austin LLP 555 California Street Suite 2000 San Francisco CA 94104 USA Tel: +1 415 772 1220 Fax: +1 415 772 7400 Email: vsekhon@sidley.com Web: www.sidley.com
Introduction Private equity (PE) continues to play a pivotal and essential role in shaping the American financial land - scape, fostering innovation, growth and transforma - tion across various industries. As the PE sector in the US has evolved, so has its legal framework, shaped by regulatory changes, market dynamics, emerging trends and other issues. The outcome of the 2024 US presidential election, which brought significant shifts in regulatory and eco - nomic policy, has already begun to influence the PE landscape to date in 2025 and is expected to continue shaping the sector’s legal and operational environ - ment in the years ahead. California is experiencing these same national M&A and PE trends, but with heightened concentration on artificial intelligence and technology transactions in Northern California and media and entertainment transactions in South - ern California. Additionally, the effects of ongoing and emerging geopolitical conflicts – including those in Ukraine, Israel, India and Pakistan, as well as the recent escalation involving the US, Iran and Israel – have introduced new layers of complexity and risk, prompting PE sponsors to adapt their strategies and anticipate further changes as these situations evolve.
This chapter of the guide discusses the latest legal trends and developments in US PE, providing an over - view for PE sponsors, investors, issuers, sellers and legal practitioners. Market Dynamics and Deal Activity Tariffs, trade wars and supply chain disruptions Tariffs are causing instability, unpredictability and worries about longer trade conflicts and more pro - tectionism. The current administration has imposed substantial tariffs, many of which are being post - poned as the US negotiates improved trade terms with various countries, including through reciprocity. PE-backed companies in manufacturing, technology and consumer goods sectors are feeling the impact through higher input costs and shrinking margins, necessitating operational adjustments. As produc - tion costs rise, these companies are considering or implementing strategic restructuring, such as reshor - ing, diversifying supply chains and cost-saving meas - ures to offset these challenges. Despite the wave of tariffs, President Trump has also been cutting deals with countries such as Canada and Mexico, signalling a parallel trend of negotiated adjustments alongside the protectionist measures.
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