New York, July 28, 2022 – SPS sponsored a webinar on Thursday, July 28th titled, Sharpening Your Sourcing Strategy in Anticipation of a Down Market, moderated by David Toll of Private Equity Career Week.
CEO of SPS Nadim Malik joined Kathryn Cesari of William Blair, Megan Kneipp of Blue Point Capital Partners, and Brad McGowan of Pickwick Capital for a 75-minute discussion on how to use the latest technology, tracking metrics and marketing tactics to steer your deal ship through choppy waters. The panelists covered how rising inflation, falling stock prices, and the prospect of a recession are impacting deal opportunities for sponsors, as well as strategies for tapping new sources of deal flow, such as independent sponsors, family offices, co-investment funds, and SPACs.
Malik evaluated the state of the M&A market in Q3 2022, beginning with the boom in annual M&A deal volume seen in 2021. According to SPS data, PE deal activity increased by about 50% from the same period in 2020. H1 2022 deal volume was just below that of H1 2021 – though this was mainly due to near-record highs in Q1 2022, while deal volume has consistently decreased month-over-month since March.
The most active sectors for PE activity during H1 2022 were Industrials, Technology, and Business Services. The Technology and Healthcare sectors – which led the charge over previous quarters – were down most sharply in this period compared to the previous year. The trend toward buy-and-builds and rollups has accelerated in H1 2022, with PE firms completing 2.9 add-ons per platform so far this year.
Median sponsor deal flow in Q2 was the highest on record for this period, and the second highest quarter ever, which may point to robust deal closing activity in the quarters ahead. As median deal flow slowed during the beginning of the pandemic, the percentage of deals closed that launched during that time declined as well. SPS data in the quarters ahead will indicate whether the current era of high inflation and interest rates will have a similar effect on the closing rate of deals launched today.
With the return of business travel the M&A industry is seeing this year, firms can use the SPS suite of travel planning features and Mobile App to know where to go, meet with the most relevant deal sources and maximize productivity during trips.
SPS has upgraded our database of over 90,000 private equity and M&A transactions to a new industry taxonomy, with over 140 industries and over 560 sub-sectors for an unmatched level of accuracy and granularity in deal sourcing analytics.