New York, July 27, 2023 – SPS sponsored a webinar on Thursday, April 27th titled, Gearing Up for the Next Deal Boom, moderated by David Toll of Private Equity Career Week.
To view a recording of the full webinar, click here. To download the presentation slides, click here.
CEO of SPS Nadim Malik joined Don McDonough of GTCR, Tom Aronson of Monroe Capital, and Jeff Pranaitis of Stifel for a 75-minute discussion of how top firms are using AI, tracking metrics, and marketing tactics to make more short lists and win more transactions. The panelists covered a review of Q2 deal-making and an industry-by-industry outlook for private equity deal flow in 2023 and 2024, an assessment of where pricing multiples and leverages are headed, and more.
Malik evaluated the state of deal activity in the market over the past few years. Deal activity declined by just under 15% last year compared to 2021, and is on track for a similar decline in 2023. PE represented the majority of M&A activity compared to strategic buyers last year, a trend that began in 2021 has remained intact so far in 2023, with PE activity consistently representing 53% of overall deal activity since 2021.
Looking at quarterly closed deal activity, quarterly deal counts are down every single quarter since Q4 2021. PE deal activity in Q2 2023 was down 25% compared to Q2 2022, and corporate deal activity was down 30% (Note: These percentages may decrease as more closed deal data for Q2 2023 is discovered.) Q1 2023 deal activity was down 25% compared to the same period in 2022, more or less in line with the Q2 decline.
Looking at the most active sectors for the 1H 2023 vs 1H 2022 broken out between strategic and PE deal, Industrials has been the most active sector, but is down over 30% compared to last year, followed by Technology and Business Services, which are down 28% and 30% respectively. The sectors with the least decline YoY are Healthcare and Energy. PE has the edge over Corporate buyers in all of the top five most active verticals, while the financial services, energy, and media and telecom sectors saw a higher share of strategic vs PE deals.
The trend of the buy-and-build and roll-up strategies in private equity continues to increase, reaching 2.7 add-ons for every platform in the first half of 2023, after coming in at 2.6 add-ons for every platform last year.
