Since last year, PE firms have taken a step back from closing deals. Following the deal boom of 2021, many firms enjoyed a prosperous fundraising period. But even with pockets full of dry powder, firms have been reluctant to capitalize given a flurry of global and economic headwinds.

Instead, firms have assumed a conservative approach in preparation for all eventualities: Will the Fed keep raising rates? Will inflation cool? Are we looking at a hard or soft landing?

In this episode, we speak with Pierce Coticchia of Altamont Capital about the firm’s operational focus and their latest commitment to entering the ESG market space.

Historically, the driving forces behind M&A investment strategy have been primarily strategic fit and financial profile. However, Environmental, Social, and Governance (ESG) have become increasingly critical in these decisions. More than ever, ESG considerations are integral to assessing strategic fit – a major shift from ESG as a desirable add-on to a deal-making necessity.

From identifying potential opportunities to forecasting company metrics and revenue, AI has the potential for unparalleled impact in the M&A process. While traditionally, AI facilitated data analysis and risk mitigation, the emergence of recent technology – specifically large language models – has exponentially expanded its impact. These models can process vast amounts of textual data, enabling a nuanced understanding of market dynamics, potential M&A opportunities, and competitive landscapes.

The headlines on PE and M&A deal activity have been bleak over the past year or so. With a confluence of macroeconomic conditions creating a perfect storm for a slowdown, and the reinforcing effect of market sentiment driving hesitation to buy and sell, firms are questioning what it will take for deal activity to revitalize.

By nature, financial market behavior relies on a dynamic relationship among the factors influencing it. And any professional who’s been around the block knows, in terms of a bounce-back, it’s not a question of if – but when. In searching for the answer, firms may turn to their own deal pipelines or anecdotal signs of life to capture an outlook.

PE and M&A professionals far and wide can agree on one thing – the last year has seen a shortage in supply of attractive assets. If firms haven’t seen a dip in deal flow, odds are the volume of quality assets in their pipelines have taken a hit over recent quarters.