US Private Equity Forecast 2023
This report takes an in-depth look at how senior executives at US private equity firms are planning for the year ahead. It is based on a survey of 100 senior executives across four different fund sizes plus a large range of research signals.
Find out how managers are doubling down on sector expertise, exploring new avenues for deals and exits, and using cutting-edge technology to ensure they don’t get left behind.
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“Although the US PE outlook remains challenging, it’s evident from our latest survey that direct lending and a focus on higher quality deals will play a larger part going forward. Tech and AI are still dominant themes, despite historic high valuations.”
Joshua Maxey
Co-Founder and Head of Corporate Development
Third Bridge
Key highlights include:
The outlook is challenging.
Most managers expect fundraising to become more difficult. Exit activity and deployment are projected to slow. Widening bid-ask spreads are choking deal flow and PE is preparing to hold assets for longer.
The rapidly evolving industry.
PE is finding ways to protect portfolio company value, unlock liquidity for investors, take advantage of new pools of debt financing, and explore avenues for new deals and exits.
The draw of AI and infrastructure.
Despite having the widest bid-ask spreads, our report reveals how these categories will see the highest levels of PE activity over the next 12 months. Also expect declines in PE activity around Transport, Business Services, and Financial Institutions.
The significance of size and scale.
The largest funds are more optimistic about their fundraising, deployment, exit and portfolio performance than smaller managers. Industry consolidation has been much discussed, and the pressures facing the market now look set to make this a reality.
The need for state-of-the-art tech and research based insights.
Deep specialisation and sector expertise are now must-haves. Deal sourcing is far more complex and when assets do come to market, there is a cluster of funds ready to transact. Firms with the best systems and industry-specific knowledge have a huge advantage.
Contents
Section 1: The fundraising environment: Challenges versus opportunities
Section 2: Lending trends: High rates drive a long-term shift in the financing landscape
Section 3: The bid-ask spread: Sector splits stand out
Section 4: Deployment activity: Proceeding with caution
Section 5: Divestment activity: In for the long haul
Section 6: Portfolio management: Firms double down
Section 7: Game-changing advanced technology and artificial intelligence
Section 8: Leveraging research to improve performance
Report methodology
In the second quarter of 2023, Mergermarket, on behalf of Third Bridge, surveyed 100 senior executives from PE firms based in the US. Among respondents, the last fund size is evenly distributed across US$500m-US$1bn, US$1bn-US$5bn, US$5bn-US$10bn and US$10bn+.
The survey includes a combination of qualitative and quantitative questions. All interviews were conducted over the telephone by appointment. Results were analysed and collated by Mergermarket, and all responses are anonymised and presented in aggregate.
Mergermarket blends market-leading human insights, advanced machine learning and 30+ years of Dealogic data to deliver the earliest possible signals of potential M&A opportunities, deals, threats and challenges. Using Mergermarket our clients gain a clear strategic vision, reduce risks, and seize growth opportunities, ultimately to outpace their competitors. Additionally, our extensive network and community ecosystem foster insider connections and promote knowledge-sharing, helping users stay up to speed.
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