Exploring the return of traditional financing in private equity M&A, potential sectors leading deal activity, exit strategies maximizing sale proceeds, the role of private credit in financing, sector opportunities in the private equity market, and anticipation of increased transaction volume and market optimism for 2024.
Conventional financing regains appeal in private equity M&A.
Cyclical industrials expected to lead deal activity in 2024.
Deep dives
Private Equity Trends for 2024
Looking ahead to 2024, private equity firms are navigating various strategies in the M&A environment. The discussion highlights the importance of considering IPO markets, portfolio company growth, and the preference for full-sale proceeds over IPOs. Dual-track opportunities are being explored, with IPOs serving as a stage monetization option, although challenges like leverage profiles in the public sphere exist.
Role of Private Credit in Financing
Private credit remains a significant component in financing strategies, playing a crucial role alongside syndicated and traditional markets. Challenges such as dealing with a limited group of lenders and refinancing issues are noted, but the flexibility and cost-effectiveness of private credit are emphasized. As markets shift to lower rate environments, the potential to refinance deals at more favorable rates is seen as a positive trend.
Industry Sector Outlook for Deal Activity
Across sectors like energy, industrial, economic services, healthcare, and technology, robust M&A activity is anticipated. Factors such as onshoring opportunities, growth in infrastructure investments, and evolving infrastructural fund criteria are highlighted. The forecast points towards active engagement in medical devices, services, specialty pharma, and broader asset management sectors, setting the stage for a varied yet dynamic deal landscape in 2024.
Familiar fixtures are set to return to private equity M&A. Conventional financing is starting to look more attractive again; traditional sales are poised to return to the mix. Meanwhile, cyclical industrials are among the sectors well placed to lead the way in deal 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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