No Match Found
In 2023, private equity (PE) activity remained sharply down from its pandemic peak, reflecting stubbornly high inflation and correspondingly elevated interest rates and capital costs. Despite sitting on unprecedented capital, investors remained cautious, awaiting reductions in asset valuations to reflect cooler demand and tighter financing. Vendors, for their part, are willing to wait for the right suitor, extending hold periods to maximize exit value.
We expect many of these factors to persist in 2024. In this context, value creation (both driving growth and expanding margins) will remain critical, both to justify cost-of-entry for new investors, and to achieve target internal rate of returns (IRRs) for owners on high-priced deals made during the frothy pandemic market. In addition, we see cash management and creative deal structuring coming into ever sharper focus, as elevated interest rates and costly credit become the new normal.
Putting this together, we see three key trends which will define private equity for 2024 and beyond:
“This dealmaking environment is a new normal, and we see opportunities for those able to capitalize by combining innovative dealmaking and a growth mindset with a relentless focus on operational excellence and value creation.”