Private Debt's Rising Role in High-Value Buyouts: A Strategic Shift in a Subdued M&A Market

In the shadow of a sluggish M&A market, private debt has emerged as a lifeline for high-stakes buyouts, enabling acquirers to navigate tighter credit conditions and regulatory scrutiny. The recent $1 billion refinancing of Blackstone Real Estate Income Trust's (BREIT) industrial portfolio—orchestrated by Goldman Sachs and a consortium of major banks—offers a compelling case study of how private debt is reshaping the landscape of large-scale transactions. While this deal did not directly involve Sapiens International (NASDAQ: SPNS), it underscores a broader trend: private credit is no longer a niche tool but a cornerstone of capital structure in an era where traditional financing is increasingly constrained.

The Sapiens Acquisition: A Case of Private Debt's Strategic Flexibility

Sapiens International's $2.5 billion all-cash buyout by Advent, a private equity firm, highlights the growing reliance on private debt to fund high-valuation deals. Advent's $1.3 billion equity commitment, paired with $1.2 billion in debt, exemplifies the classic private equity capital structure. However, the absence of Blackstone or Goldman Sachs in this specific transaction does not diminish the significance of private debt's role. Instead, it reflects a broader ecosystem where firms like Advent are leveraging alternative financing to execute deals in a market where public equity valuations remain volatile.

The Sapiens deal's all-cash structure—offering immediate liquidity to shareholders—reduces integration risks and aligns with Advent's long-term growth strategy. This approach mirrors the BREIT refinancing, where Blackstone and Goldman Sachs used a $1 billion CMBS loan to repay existing debt and optimize capital. Both transactions illustrate how private debt allows acquirers to sidestep the constraints of public markets, offering flexibility in structuring deals with tailored terms.

Why Private Debt? The Strategic Shift in a Subdued M&A Market

The shift toward private debt is driven by several factors. First, traditional bank lending has become risk-averse in a post-pandemic economy marked by inflation and geopolitical uncertainty. Second, private credit offers higher yields and more flexible terms, particularly for large, asset-backed portfolios. Blackstone's BCRED fund, for instance, has deployed over $4 billion in Q2 2025 alone, targeting high-quality businesses with strong EBITDA profiles. This disciplined approach—favoring senior secured debt with low loan-to-value ratios—has enabled Blackstone to generate consistent returns even as public markets fluctuate.

Goldman Sachs, meanwhile, has expanded its Capital Solutions Group to dominate the private credit space. With $145 billion in alternative assets under management, the firm is positioning itself as a one-stop shop for private equity-backed deals. Its recent role in the $4.25 billion debt financing for Sycamore Partners' Boots acquisition further illustrates how institutional players are leveraging private debt to scale buyouts.

The Risks and Rewards of a Private Debt-Driven Market

While private debt offers advantages, it is not without risks. The BREIT refinancing, for example, relies on a floating-rate structure, exposing it to interest rate volatility. Similarly, Sapiens' stressed net cash flow estimates—lower than the issuer's projections—highlight the need for conservative underwriting. Investors must scrutinize cap rates, tenant diversity, and geographic concentration to avoid overleveraged assets.

However, the benefits are clear. For acquirers, private debt provides access to capital at lower costs than public markets. For investors, private credit funds like BCRED offer diversification and steady income. The key lies in balancing risk with reward, a principle both Blackstone and Goldman Sachs have mastered.

Investment Implications and Strategic Recommendations

For investors, the rise of private debt signals an opportunity to allocate capital to alternative assets. Publicly traded private credit funds, such as BX and GS's private credit vehicles, offer exposure to this trend without the illiquidity of direct private equity. Additionally, companies with strong private debt structures—like Sapiens, which retained a minority stake for its parent—may present long-term value as they scale under private ownership.

In a subdued M&A market, the ability to secure flexible, high-yield financing will separate successful acquirers from the rest. As Blackstone and Goldman Sachs demonstrate, private debt is not just a tool—it's a strategic imperative.

Conclusion

The $1 billion refinancing of BREIT's industrial portfolio and the Sapiens acquisition by Advent are not isolated events but symptoms of a larger shift. As public markets remain unpredictable, private debt is becoming the backbone of high-value buyouts. For investors, this means rethinking traditional capital allocation strategies and embracing the agility of private credit. In a world where liquidity is king, those who master the art of private debt will find themselves at the forefront of the next wave of value creation.