Private Equity Dealmaking in 2023

While private equity has often fared better than its publicly-traded counterparts under difficult economic circumstances, PE has still had to contend with significant headwinds. Results of macroeconomic factors — including the Russia/Ukraine conflict, supply chain issues, and rising inflation — have resulted in an overall slowing of deal activity in the second half of 2022. Global private markets fundraising overall declined by 11 percent to $1.2 trillion

The middle market is not immune to such struggles — middle-market direct lending volumes have declined by 16% since last year. Portfolio company executives have felt these effects: 61.1% of our survey respondents have noticed fewer deals in the last year. 

“We’ve certainly seen, at least in the latter half of 2022, a significant decline in the volume of deals getting done. It’s influenced by the fact that 2021 was a record year. The first half of 2022 included deals that started in 2021 and rolled over into 2022.” 

— Bill Hunter, industry advisor and former CEO of Terra Nova Solutions 

Though many challenges loom on the horizon, there are three that generally pose the greatest obstacles currently: finding quality assets, managing more difficult deal terms, and securing investments from more cautious buyers. However, these strategies can help to persist and even thrive in these conditions.

Leverage Private Equity’s Market Position