Good morning, {{First Name}}! The cost of capital is climbing again, but money may not be PE’s biggest constraint. Treasury yields have broken above 5%, private credit stress is creeping higher, and our latest survey finds integration capacity—not financing or valuations—is the biggest bottleneck for add-on acquisitions.

Plus, HCLSoftware makes a bet on agentic automation, and we track more than $6B of deal activity across aviation, industrial technology, and consumer platforms.

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MICROSURVEY

The biggest constraint on add on acquisitions is not financing or valuation. It is integration capacity.

Across all three respondent groups, integration ranked first. 50% of Commercial and Corporate Leadership and 50% of Investment and Finance respondents pointed to integration capacity, rising to 56% among Operations, Risk, Legal and Technology professionals.

The contrast is telling. Financing costs captured between 25% and 33% of responses, while target valuations drew just 11% to 25%. Capital and pricing still matter, but neither appears to be the primary brake on acquisition activity.

For sponsors pursuing consolidation strategies, the implication is operational. The next add on may be financially attractive and readily financeable, but execution capacity can determine whether the platform can absorb it without diluting the value creation thesis.

The bottleneck has moved from buying businesses to digesting them. (More)

HEADLINE OF THE WEEK

U.S. Treasury yields surged through the 5% threshold over the past week, with the 10-year briefly reaching roughly 5.2% and the 30-year around 5.5%, as higher energy prices, resilient growth and inflation concerns pushed global bond markets toward a renewed higher-for-longer rate regime.

The move has not been confined to the U.S.: sovereign yields have also risen sharply across Europe and Japan, suggesting a broader repricing of the global risk-free rate rather than an isolated Treasury selloff.

So What? For Private Equity, a structurally higher risk-free rate raises acquisition financing and refinancing costs, puts additional pressure on highly levered portfolio companies, and makes future returns increasingly dependent on EBITDA growth and operational value creation rather than multiple expansion and cheap leverage—particularly with roughly $4.3 trillion of U.S. non-financial corporate debt scheduled to mature between 2027 and 2031. (More)

PRIVATE CREDIT CORNER

Private credit defaults are moving higher, but the headline numbers need context. Proskauer’s index puts the overall default rate at 2.51% in Q2 2026, down from 2.73% in Q1 and still nowhere near the 8.1% spike of 2020.

The more interesting story sits beneath the aggregate. Borrowers with at least $50 million of EBITDA saw defaults climb from just 0.5% in Q1 2025 to 3.0% in Q1 2026, suggesting size alone is no longer much of a shield.

Meanwhile, Fitch reports substantially higher stress, with its private credit default rate reaching 6.3% through August. But most events are not bankruptcies. Payment deferrals and PIK represented 47% of defaults, while stressed maturity extensions accounted for 41%.

For sponsors, the risk is increasingly about restructurings that keep companies alive while quietly rewriting the capital structure. (More)

DEAL OF THE WEEK

HCLSoftware is acquiring Robotiq.ai, a Zagreb-based automation platform, in a deal announced September 28. Financial terms were not disclosed.

The acquisition expands HCLSoftware’s push into agentic automation, as traditional RPA evolves from repetitive tasks toward AI-driven enterprise workflows.

The PE angle: the global RPA market is projected to approach $69B by 2032, and AI is expanding the opportunity. For investors and strategic buyers, automation is increasingly becoming infrastructure for enterprise productivity—setting the stage for further consolidation as RPA and agentic AI converge.

Read more

DEALS TRACKER

GTCR → Tactacam | $1B+
GTCR acquired Bertram Capital-backed Tactacam, adding a fast-growing connected camera and subscription platform. Read more

Greenbriar → Spectrum Control | ~$1.8B
Greenbriar agreed to acquire AEA-backed Spectrum Control, a manufacturer of RF and microwave components. Read more

AAR → MRO Holdings | $4B EV
AAR agreed to acquire a 65% stake in Bain Capital-backed MRO Holdings, expanding its aircraft maintenance platform. Read more

Transom Capital → SoundThinking | $8/share + CVR
Transom agreed to take SoundThinking private, adding the public-safety technology company to its portfolio. Read more

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