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Bailey McCann, Opalesque New York: Higher capital costs, inflation and overall uncertainty continue to limit private equity activity. But greenshoots may be on the horizon.
Recent data from S&P Global paints a dim picture. In the first nine months of 2023, global private equity investments had an aggregate value of $365.3 billion, a decline of 44% year-over-year. Similarly, the number of deals dropped 36% year-over-year to 12,988 deals YTD from 20,333 deals in the same period of 2022.
Still, Pete Witte global private equity lead analyst for EY suggest that deal activity could be starting to pick up.
"Today's market is seeing a broader array of deal types, in contrast to the first half of this year, which was characterized by a very narrow focus on take-privates and add-on transactions. Recent months, for example, have seen a number of large carve-outs from corporate parents seeking to divest non-core or orphan assets," Witte wrote in a recent research note on key takeaways from the third quarter. These carve-outs, he says, could be competitive differentiators in a choppy market.
Exit activity is increasing as well Witte argues. In the third quarter of this year, PE firms announced 68 exits via M&A, up from 47 in the first quarter of the year, and up from 57 in Q2. That's still lower than last year, but Witte notes that the increase is positive.
EY recently surveyed PE professionals, and they were split on the near term outlook for exits. But Witte ...................... To view our full article Click here
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