Deal Volume
Perspectives on a slower era in private markets
Mar 26, 2024
Fredrik Dahlqvist and David Quigley, senior partners at McKinsey, discuss private markets trends and challenges. They explore allocation strategies, tech adoption, and value creation in private equity. The guests emphasize the importance of data, technology, and talent in driving performance and generating value in assets.
41:07
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Quick takeaways
- Valuations and multiples are pressured by higher interest rates, leading to lower deal volumes and challenges in making commitments.
- Private equity buyouts and venture capital exhibit differing performance trajectories, with buyouts seeing profits while VC investments face negative performance.
Deep dives
The Denominator Effect and Its Impact on Deal Volume
Higher interest rates and financing costs have pressured valuations and multiples in the private markets, leading to lower deal volumes. Sellers are hesitant to transact at lower multiples, resulting in fewer distributions to LPs. This has caused LPs to be overweight relative to their targets, making it challenging to make commitments at previous levels.
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