How LBO Firms Are Financing Deals With Preferred Equity

The Acquisition Talk with Fexingo: Mergers, Buyouts, and Business Sales for Operators · May 22, 2026 · 12m · transcript

Lucas and Luna unpack the quiet rise of preferred equity in leveraged buyouts. In 2025 and early 2026, as syndicated loan markets tightened and direct lenders grew cautious, private equity firms began layering preferred stock into their capital structures—not as a last resort, but as a deliberate tool to bridge valuation gaps, preserve equity returns, and avoid default triggers. The hosts zero in on a specific mid-market case: the $1.4 billion take-private of a specialty chemical company by a middle-market PE firm, where preferred equity accounted for roughly 20 percent of the total…