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By: Mark Veldon, partner at AlixPartners, a financial advisory and global consulting firm.
Moving into 2024, while many of the macro factors that dampened dealmaking activity persist, I can see shoots of recovery and expect the market to come back to life in the 12 months ahead.
The status quo that we saw in 2023 cannot go on indefinitely, and Private Equity's realignment has brought widespread appreciation that interest rates and financing costs will remain high for some time. Accepting this landscape as a "new normal" should kick-start deal flow once more, albeit with associated challenges to overcome in getting the market moving again.
Many PE firms are now embarking on fundraising, but in order to do so they need to deploy capital. Although there have been a limited number of processes recently, we know that many PE firms have portcos ready for exit.
The significant mismatch in bid-ask spreads in the past 18 months has extended many hold periods well beyond what was originally planned - allowing enforced operational efficiency and margin improvement efforts to apply a renewed lustre to these assets and heighten their appeal in a reinvigorated market. And again, of course, PE firms need to exit to generate returns to support financing.
I also expect public-to-private opportunities to remain popular - listed companies are open to going private in the current environment in pursuit of greater flexibility and the ability to generate gre...................... To view our full article Click here
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