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Alternative Market Briefing

Other Voices: Private equity firms battle headwinds in H1

Friday, August 26, 2022

By: Oliver Brahmst and Luke Laumann, from US law firm White & Case.

In line with overall M&A activity, US PE dealmaking in H1 lagged behind 2021 in terms of both value and volume. Total deal value of US$415 billion during the first half of the year represents a 28 percent fall year-on-year-yet this level of activity looks on track to reach the second-highest annual deal value in Mergermarket's history (since 2006), after the record-topping 2021.

A deal volume of 1,727, while 20 percent below the 2021 total, is still firmly ahead of pre-2020 activity levels. This resilience proves that a new level of US PE dealmaking is being set in the post-pandemic era.

PE firms have managed to achieve this level of activity despite more challenging macroeconomic conditions, with rising interest rates making it increasingly difficult to agree on valuations. Tighter monetary conditions also mean that GPs are finding financing more difficult for their buyouts. When facing economic headwinds, PE firms are also more likely to extend their investment periods, which may cause a slowdown in the exit market.

Yet, while an economic downturn is widely anticipated across the market, PE firms are well placed to take advantage of the investment opportunities these conditions present.

Tech deals dominate activity

The TMT sector saw the greatest level of buyout activity in the first six months of this year, by both value and volume. The number of transactions increased by ......................

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