New York, April 17, 2025 – SPS sponsored a webinar on Thursday, April 17th titled The Evolving Deal Landscape––Shifting Deal Sources & Emerging Exit Strategies, moderated by David Toll of Private Equity Career Week.
To view a recording of the full webinar, click here. To download the presentation slides, click here.
Managing Director of Product Strategy at SPS Brenden Gobell, Christen Paras of MiddleGround Capital, Robert (Bobby) Reifman of Lincoln International, and James Schiro of Moelis & Company led a 75-minute discussion on under-the-radar trends and strategic new opportunities to look out for.
Examining the downward trend in total PE and M&A deal volume, which had been steadily declining since its record high in 2021, has officially reversed, with 2024 deal volume rising 4% year over year. The trend that began in 2020 of PE representing a larger share of overall M&A activity compared to strategic buyers is still going strong, with PE activity representing 54% of overall deal volume last year, compared to 55% in 2023.
Analyzing quarterly closed deal activity reveals the wild swings in deal activity over the past six years. Despite this turbulence, there are layers of consistency. Deal volume has been nearly identical between Q2 and Q3 for the past three years, which underscores how important the next few months are. Also, Q1 deal volume has always been less than the preceding Q4, often significantly. However, activity last quarter is down 12% compared to Q1 last year, and 6% compared to Q1 2023.
Comparing the top six Sectors by deal volume, all but one saw an increase in Financings YoY – even in Consumer and Healthcare where total PE deal volume was down YoY. Add-on activity peaked in Financial Services at 75%, followed by Business Services at 72% and Industrials at 65%. Add-ons still comprised the biggest share, if not majority, amongst transaction types across all sectors in 2024, and are the key contributor behind PE activity representing a higher share vs. corporate buyers of overall M&A activity for the last 5 years.
The buy-and-build strategy has been rolling uphill since 2016, with the ratio of add-ons to buyouts growing continuously from 1.4 all the way up to 2.5 in 2023. Last year it decreased slightly at 2.4, with total add-ons dropping slightly and buyouts staying flat YoY.
Looking at PE pipeline data, the median number of deals PE firms saw (or logged to be precise) was 185 in Q1, slightly down from the prior year, but still above 2023. Over the past decade, Q2 was the max of every year except 2020 and 2021 due to covid. This makes sense as dealmaking ramps up alongside travel and conferences, with the goal of closing these same deals before year end.
Gobell included an analysis on Holding periods from SPS’s Private Equity Harvest Report that was published in late February. PE holding periods are now over 5.5 years on average, after steadily increasing from just under 4.5 years back in 2018.
Market Coverage is the overlay of a firm’s deal pipeline against closed relevant transactions, to identify new relationships and improve existing ones. As the industry standard for origination insights, the SPS Origination Benchmark Report is a bi-annual publication received by each qualifying SPS client, tailored to their target investment criteria. It provides benchmarks on market coverage, deal flow efficiency, and sourcing performance, relative to a peer group of similar private equity firms and the broader industry. The report includes 176 qualified PE firms, segmented into 8 different peer groups, delivering the most comprehensive view of how firms compare in market coverage and sourcing success
