New York, January 25, 2024 – SPS sponsored a webinar on Thursday, January 25th titled, Trending Origination Strategies for 2024, 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, Clay Bryan of B. Riley Financial, Daniel Gajewski of Lazard, and Stephen Madsen of Blue Wolf Capital led a 75-minute discussion covering a review of 2023 deal-making and the state of deal flow early in 2024.
Overall M&A deal activity declined by just under 20% in 2023 from the prior year, compared to a 14% decline from 2021 to 2022. PE deal activity continues to represent a larger share of overall M&A activity compared to strategic buyers, with PE activity representing 54% of overall deal activity for 2023. Deal activity in Q4 2023 was down 21% compared to Q4 2022 and is down 45% from its peak in Q4 2021.
On the sector level, Industrials continues to be the most active sector, but is currently down 19% compared to last year after seeing an increase in activity from 2022 to 2023. Technology followed but has seen a sharp year-over-year drop for the last two years. Business Services came in third, which was down significantly in 2023 after relatively consistent activity over the previous two years.
Examining PE activity only, Business Services, Healthcare, and Financial Services saw the greatest add-on activity relative to other deal types in 2023, while financings remain an important investment strategy in the Technology sector. Add-ons comprised the largest share of all transaction types for most sectors in 2023.
An analysis of key sponsor deal sources over the past five years indicates that PE exits have accounted for over a quarter of new platform acquisitions closed by sponsors since 2019, and over 60% of PE exits went to PE buyers in the same period.
2023’s top active intermediaries are in, with Generational Equity leading the pack for deals in the $10-49MM EV range, Houlihan Lokey advising on the most deals in the $50-499MM EV range, and Goldman Sachs leading in deals with EVs above $500MM.
