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By Thierry Bosly, Oliver Brahmst and Daniel Yeh from global law firm White & Case.

PE managers endured a testing year in 2022 as macroeconomic volatility, a tougher fundraising backdrop and climbing debt costs sparked double-digit declines in deal value and volume.

Global PE-backed deal value for 2022 came in 40% down year-on-year at US$1.3 trillion, with deal volumes off by almost a fifth (19%) at 8,168 transactions. Quarterly deal figures gradually regressed through the course of the year with value and volume declining in each quarter as dealmaking conditions deteriorated.

Multiple headwinds dampen deal appetite

The large drop-off in PE deal numbers came as dealmakers coped with multiple headwinds.

On the fundraising front, managers faced a contracting fundraising market for the first time in years as increasingly risk averse institutional investors pared back their PE programs. According to Preqin, global PE funds raised US$405 billion in the first nine months of 2022, with the market forecast to see a fundraising decline of more than 20% for 2022. Conditions are set to remain tough, with Preqin anticipating a further 2.7% decline in fundraising takings in 2023.

After a record year of dealmaking and deployment in 2021, some managers found themselves ahead of deployment schedules and held back from making any new deals in 2022. Instead, many chose to hold on to their fund reserves and avoid an early return to the fundraising market.

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