New York, October 28, 2022 – SPS sponsored a webinar on Thursday, October 27th titled, What Top Originators Predict for 2023 , moderated by David Toll of Private Equity Career Week.
CEO of SPS Nadim Malik joined Michael Butler of Cascadia Capital, Michelle Eidson of Crest Rock Partners, and Isaiah Knouff of Canaccord Genuity LLC for a 75-minute discussion on how to use the latest technology, tracking metrics and marketing tactics top originators are using to prepare for 2023. The panelists covered under-the-radar industry trends that are generating platform and add-on opportunities, how to build and sustain winning relationships with deal intermediaries, and more.
Malik evaluated the state of the M&A market in Q4 2022, beginning with the boom in annual M&A deal volume seen in 2021. According to SPS data, PE deal activity increased by about 53% compared to 2020. As of the first three quarters of 2022, PE activity is still outpacing corporate, and is down about 13% from the same period in 2021. However, drilling down to quarterly trends, Q3 2022 deal volume has dropped by 24% from Q3 2021. Despite this, last quarter’s activity was slightly above pre-pandemic levels in Q3 2019.
So far this year, Industrials is by far the most active sector for PE activity, having declined only slightly compared to the first three quarters of 2021. Business Services and Technology follow, with the Technology sector seeing a sharp drop after experiencing significant growth in the last decade.
One driver for PE’s outpacing corporate activity over recent quarters has been the trend toward buy-and-builds and rollups, which has accelerated in 2022 with PE firms completing 2.7 add-ons per platform so far this year.
If closed deal activity will indeed continue to taper, this trend is not represented in PE pipeline stats. Q3 2022 median sponsor deal flow was the second highest on record for this period, and is significantly higher than pre-pandemic levels for this period. While this could indicate higher deal closing volumes ahead, it may be a result of private equity firms becoming more adept at sourcing deals.
SPS has upgraded our database of over 90,000 private equity and M&A transactions to a new industry taxonomy, with over 120 industries and over 480 sub-sectors for an unmatched level of accuracy and granularity in deal sourcing analytics. Using the Healthcare space as an example, we can drill down to find the key intermediaries, competitors, and senior lenders who are most active for a target segment of this market.
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, and meet with the most relevant deal sources. Additionally, the SPS Conference Evaluator tool allows firms to maximize productivity attending conferences by uploading attendee lists to capture a rank of the most relevant professionals to meet with.