Hartford Business Journal

HARTFORDBUSINESS.COM | OCTOBER 20, 2025 27 Managing Expectations Private equity investors cautious after Fed's first rate cut in nine months don't want to see rampant inflation and then have rates be jacked right back up in 18 months." Jay, a former neuro- surgeon who entered private equity in the 1990s, said sustained and gradual rate reduc- tions would eventually lift deal activity. But he cautioned against expecting much from the recent cut. Stability first For newer firms, stability matters more than steep cuts. Matthew Allard, who co-founded Case Study Capital Partners in Greenwich this summer, said the Fed has deliberately moved slowly. "There's been an ongoing expectation for a while that rates were going to drop faster than they actually have," he said. "And so, rather than the steeper drop off, it's been much more gradual." Case Study targets majority stakes in founder- and family-owned businesses with $5 million to $25 million in annual earnings. Allard said lower rates may not directly increase deal flow but could help by stimulating broader economic activity. He hopes to see another 0.5 to 1 percentage point cut over the next year, in line with market expectations. "As long as you don't deviate from that expectation in a significant way, that points to the stability that the markets are looking for," he said. Allard added that while lower rates can inflate company valuations, his firm emphasizes a disciplined investment approach. "Unless we have a fundamental thesis that we can add value beyond just our capital, then it's not going to be the right investment for us," he said. By Michael Juliano mjuliano@hartfordbusiness.com P rivate equity executives in Connecticut say the Federal Reserve's decision to trim interest rates for the first time in nine months will reduce borrowing costs, but likely won't spark a surge in new deals. The Fed cut its key rate by a quarter point on Sept. 17 to a target range of 4% to 4.25%. The decision follows a slowdown in private equity activity during the first half of the year, when firms invested $202 billion across 1,608 deals in the second quarter — down from $221 billion and about 2,200 deals a year earlier, according to KPMG. James Andersen, co-founder of Stamford-based Creative Capital, said the reduction isn't large enough to change the market. "I think a quarter-point cut doesn't do a lot particularly," he said. His firm, which manages $2.1 billion, invests in healthcare, manufacturing and distribution compa- nies valued between $25 million and $100 million. Andersen said pent-up demand could push some deals forward, but warned the federal government's need to refinance $37 trillion in debt may limit further cuts. Because the U.S. is carrying such a large debt load, further rate cuts could make it harder for the government to finance borrowing without putting upward pressure on inflation. "I think those who are counting on multiple rate cuts, I think are probably kidding themselves," Andersen said. The Federal Reserve's next interest rate decision is expected to come at the end of October. The Fed has indicated it will continue easing policy gradually as inflation edges closer to its 2% target. While officials left the door open for addi- tional cuts later this year, they empha- sized that future moves will depend on incoming economic data and signs that both prices and the job market are cooling in a sustainable way. Deals moving Others see signs of activity. Russell Greenberg, co-founder of Wilton-based Altus Capital Partners, said lower rates are nudging some buyers and sellers off the sidelines. Altus, which manages $179 million, is selling a manufacturing company while looking to bid on a pharmaceutical equip- ment maker, Greenberg said. He said the lower rates will benefit his firm, which buys companies with $50 million to $100 million in annual revenue, by creating cheaper debt and higher valuations. However, a lower-rate environment will not change Altus' strategy of making only a few investments a year, he said. Greenberg said his firm expects more positive impact from Trump adminis- tration economic policies — including reduced business regulations, equip- ment tax write-offs and tariffs aimed at lowering the deficit. "There are all these tailwinds that should help activity," he said. Greenwich-based Great Point Part- ners, which manages about $2 billion, also expects some benefit. But founder Jeffrey Jay said he hopes the Fed keeps lowering rates strategically over time — with a cautious eye on inflation — to 3%. "I'd welcome another 50 basis points or another 100 basis points lower," he said. "I think that'd be terrific, but I also FEDERAL FUNDS RATE HISTORY Matthew Allard, co-founder of Case Study Capital Partners in Greenwich, said the Fed has deliberately moved slowly in raising rates. HBJ Photo | Michael Juliano Russell Greenberg James Andersen Jeffrey Jay Source: Federal Reserve | https://www.forbes.com/advisor/investing/fed-funds-rate-history/ 6% 5% 4% 3% 2% 1% 0% 3/17/22 5/5/22 6/16/22 7/27/22 9/21/22 11/2/22 3/22/23 9/18/24 12/14/22 5/3/23 11/7/24 2/1/23 7/26/23 12/18/24 9/17/25 UPPER LIMIT RATE DATE OF CHANGE

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