The Boston-based consulting firm Bain & Company released its Global Private Equity Report 2023.
In the foreword, the Chairman of Bain’s Global Private Equity practice, Hugh MacArthur compares the year 2022 for the industry to the novel A tale of two cities by Charles Dickens : a roaring first semester with a peak of activity interrupted by the abrupt raise of the rates by the Federal Reserve in June.
Overall deals exit and fund-raising counts dropped through 2022, the investments reaching the total of 654 billions dollars versus 1,012 billions dollars in 2021. In 2022 Global Buyout value dropped by 35 %.
Acording to the report : high rates and the high level of inflationchallenge the GPs “to find new ways to create value and underwrite risk”
Nevertheless, as the report is stressing that Private Equity has been more resilient that the public markets, it gives. rather optimistic perspectives on the long run.
1/ Firstly, because once the view on the real economy will be clearer, the trust will come back.
2/ Secondly, because dealmakers are being very interested in new disruptive sectors that are changing the industry such as the energy transition and the Web3. (Read our article)
3/ Thirdly, because the democratization of PE (Read our article) opens a new era of “wealthy individual investors” and families.
4/ Finally, as the interest rates remain high, there is a “new imperative to create value through margin improvement and organic growth”. This is also an opportunity for private equity to pressure on multiples—and a. “to do what it does best: supply investment capital and help businesses accelerate growth”.
To read the full report, click here.