Mergermarket – Global Private Equity Outlook, 2024

The global private equity market has experienced a shift in recent years, with fund managers facing new challenges and market conditions. This report presents insights from a survey of 100 senior private equity executives in Asia, Europe, and the U.S. on how they are navigating these challenges and positioning themselves for success. The survey findings highlight several key points. Firstly, 26% of respondents believe that interest rates will have the most significant impact on the deal environment in the next 12 months. Rising debt burdens, particularly in relation to the availability and cost of leverage amid monetary tightening, are also major challenges facing the industry, cited by 38% of respondents. In terms of investment strategies, there has been a notable shift towards take-private transactions. In 2022, only 13% of general partners (GPs) expressed firm intentions of pursuing take-privates. However, this has now increased significantly, with 94% of respondents indicating they are likely to pursue such deals. The report emphasizes the importance of engaging skilled professional advisers from the start of these deals, especially in the U.S., where stockholder-plaintiffs have secured substantial damages awards in take-privates. Furthermore, the report reveals that 59% of respondents intend to divest their GP stakes over the next two years. GP-stake transactions have become increasingly popular as a means of obtaining liquidity and growth. North American PE firms are expected to lead in this area, with 64% expressing an intent to divest. Additionally, private credit has emerged as a favorable financing option for acquisition financing at the portfolio level. The U.S. regional bank crisis in 2023 has further accelerated the adoption of private credit globally. The report states that 78% of respondents already utilize private credit for acquisition financing, and 73% of those who do not currently have a private credit financing strategy are considering adding one. Overall, this report provides valuable insights into the current landscape of the global private equity market and the strategies being employed by industry professionals to overcome challenges and achieve success.