Exploring the factors impacting private equity M&A environment and expectations for 2024. Insights on global M&A trends, challenges in US M&A market, take-private volume increases. Impact of limited sponsor bid presence, exit strategies, interest rate impacts on leverage buyouts. Discussing market recovery, asset valuation, and strategic timing for M&A activities.
Private equity faced challenges in deploying capital in 2023, with volumes remaining below historical averages, while leveraging finance market shows recent improvements, hinting at a positive trend for M&A activity in 2024.
Deep dives
Overview of Global M&A Volume Trends in 2023 and 2024 Expectations
Global M&A volumes experienced a 17% decline in 2023, primarily due to a 25-30% drop in financial sponsor-related M&A. However, corporate M&A saw an increase. The market didn't surpass the $3 trillion mark for the first time in a decade. The US M&A market, accounting for about 45% of global volume, showed resilience with a 10% drop in 23. Optimism exists for an upturn in 2024.
Private Equity Trends and Transactions in 2023
Private equity faced challenges in deploying capital in 2023, with volumes remaining below historical averages. Activities such as take-private deals, carve-outs, and co-control stake sales were notable. Notably missing were traditional sponsor-to-sponsor transactions. Private equity firms extended average hold periods for assets, seeking optimal timing to access markets for exit strategies.
Analysis of Leveraged Finance Markets and Private Equity Trends
2022 posed challenges for leverage finance and private equity due to rate hikes and economic uncertainties. Equity checks in LBOs increased as leverage reduced, impacting capital structures. The subdued debt available heightened equity burdens. The leverage finance market shows recent improvements with better equity percentages and lower leverage turns, hinting at a positive trend for M&A activity in 2024.
Private equity assets have mounted to $3 trillion as sponsors maintain their grip. Will 2024 see a long-awaited surge of exits? What conditions do players need to trigger a revival of M&A and LBO activity? John Cokinos, Global Head of Leveraged Finance and Capital Markets, and Hank Johnson, Co-Head of U.S. Mergers & Acquisitions, join to explore the factors impacting the private equity M&A environment and what we can expect in 2024.
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