Creating Value at a PE Juncture Point: Insights from Bain & Co. 2024 Global PE Report – Part 2
Despite economic fluctuations and geopolitical tensions, PE firms have continued to adapt and thrive with their ability to swiftly pivot strategies, capitalize on emerging trends, and leverage their expertise in navigating complex market dynamics.
Shifting Strategies: Bain’s report highlights the ongoing shift in both investment and exit strategies. Firms are increasingly focusing on sectors with strong growth potential, such as technology, healthcare, and renewable energy, as well as industries that MacArthur refers to as ‘proof’ businesses, meaning businesses that have proven stability through uncertain conditions, i.e. those that are ‘recession-proof’.
Q1 2024 Mezzanine Market Perspective
In Q4 2023, 151 deals including mezzanine debt closed, a 76% increase from the 86 deals closed in Q3 2023. Mezzanine activity during 2023 increased approximately 22% YoY from 371 deals to 454 deals. Despite this increase, private equity deal volume decreased 14% YoY from 6,022 deals in 2022, to 5,164 deals in 2023. Out of the 151 mezzanine deals that closed in Q4 2023, 59 deals were buyouts, 60 were minority financings, 31 were sponsor-backed add-ons, and 1 was a recapitalization. The most common industries in total M&A activity for the quarter were Technology, Industrials, Consumer, and Business Services, respectively.
Creating Value at a PE Juncture Point: Insights from Bain & Co. 2024 Global PE Report – Part 1
The PE industry has experienced robust growth and transformation over the last decade. With a focus on operational value creation in new and emerging markets and an embrace of technological innovation, private equity firms have raised larger pools of capital than ever before and – until recent years – deployed that capital at a rapid pace, fueled by favorable market conditions and ample liquidity.
The 2024 Election Throws Additional Uncertainty into PE Dealmaking
Predicting private equity deal activity in the 2024 election year as up, down or steady requires balancing a number of factors, sources told SPS by Bain & Co. Though usually, elections have minimal effect on North American PE deal activity, uncertainties are weighing on PE deal flow, even as overall M&A volume has improved from last year.
