Diminishing deal flow requires firms to innovate in their sourcing approach. A recent SPS analysis concluded that PE portfolio companies are being held for an above-average period – which may reveal a treasure trove of attractive hidden deals for scrappier sponsors.
In Q3 2023, 82 deals including mezzanine debt closed, a 13% decrease from the 94 mezzanine deals closed in Q2 2023. Mezzanine activity through the first three quarters of the year increased approximately 9% YoY from 268 deals in 2022, to 293 deals in 2023. Despite the increase in mezzanine deal activity, private equity deal volume for the same time period decreased 18% from 4,487 deals in 2022, to 3,679 deals in 2023. Out of the 82 mezzanine deals that closed in Q3 2023, 33 deals were buyouts, 27 were minority financings, and 22 were sponsor-backed add-ons. The most common industries in total M&A activity for the quarter were Technology, Industrials, Business Services, and Healthcare, respectively.
The PE market has regained some footing compared to the first half of 2023. With GPs’ new year resolutions to deploy large sums of capital accumulated during recent fundraising cycles, funds are now tasked to find good deals and create value for their LPs.
As we bid farewell to 2023, it’s a time to reflect on the journey, celebrate achievements, and express gratitude for the collective efforts that have propelled SPS to new heights. Our team is proud to have reached milestones, weathered challenges, and emerged stronger and more resilient than ever. Despite economic challenges brought by 2023, SPS rose to the occasion with its thirteenth consecutive year of top-line revenue growth since our founding in 2009 and our highest client retention rates yet!
Join us as we take a closer look at some of the highlights of 2023.