The US government has been tightening its belt and some private equity firms, particularly those focused on defence and other government-related services, have braced for impact. In the early to mid-part of the last decade, private equity firms pumped capital into defence and government-contracting companies as public spending ballooned.

However, with two wars drawing to an end and steep budget cuts, appetite for such deals has dwindled, raising the prospect of more distressed plays and possibly forcing private equity firms to rethink their exit plans.