PE Firms Get Creative to Keep Deals Flowing
Deal volume is well off its peak, and that’s compelling PE firms to get creative when it comes to getting transactions done. That was the upshot of a recent webinar featuring Harv Barenz, partner at Palo Alto-based buyout firm HGGC; Dominic Chan, director and head of financial sponsor coverage at San Francisco-based investment bank Vaquero Capital; Andrew Morrow, Los Angeles-based managing director in the financial sponsors group at Houlihan Lokey; and Nadim Malik, founder and CEO of New York City-based SPS by Bain & Co.
Preempt the Summer Slowdown – Where to Find Active Advisors
According to an SPS analysis on relationship churn, 40% of advisory firms that were active in 2021 were not in 2022, while 15% of active intermediaries in 2022 sold a business for the first time during that period. As a result, data-savvy PE firms are turning to technology to help combat CRM staleness and proactively identify new relationships with active relevant intermediaries.
The State of PE Deal Flow – Quality over Quantity
Nearly halfway through 2023, the reality of the slowdown has begun to sink in, and M&A folks are attempting to foretell closing volumes for the remainder of the year and beyond. For any given firm, the greatest signal to the number of deals likely to close in the quarters ahead lies within their pipeline data for deals logged over preceding quarters. But with the effect of the downturn varying by sector of focus, predictions for the overall PE market are difficult to capture.
Private credit market remains open for business
The war in Ukraine, the stock market plunge, the spike in inflation, the early March failure of Silicon Valley Bank: each of these events landed like a punch on the chin of the private credit market. And yet, “that market has just continued to stay resilient, despite the pullback in M&A,” said Sherman Guillema, managing director, capital advisory group at investment bank Lincoln International. Indeed, Brad Stewart, managing director in the debt advisory group of investment bank Capstone Partners, said his firm had two private-credit deals in the market when the news of Silicon Valley Bank hit. None of the lenders evaluating those deals put pencils down, he said, and both deals remain on course to close.
