Inside the Strategy Room 241. The path forward for private equity
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Mar 6, 2025 In this enlightening discussion, Alex Edlich, a senior partner at McKinsey specializing in private equity, and Christopher Croke, a partner leading the Private Capital Practice in London, unpack the latest trends in the private equity landscape. They highlight a rebound in dealmaking and strategies for value creation amid changing market dynamics and rising interest rates. The duo also explores the resilience of mid-market funds, innovative investment strategies, and the shifts in industry metrics, emphasizing a cautious but optimistic outlook for 2024.
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PE Rebounding
- Private equity emerged from a challenging period in 2024, showing resilience and innovation.
- Dealmaking rebounded, especially for larger buyouts, but fundraising remained challenging and returns muted.
Dealmaking Trends
- 2024 saw a 14% increase in PE deal value, the third most active year on record, driven by larger buyouts.
- While deal count dropped, larger deals (over $500M) saw a 26% increase in value, indicating industry health.
Large Deal Impact
- Larger sponsors' willingness to do deals over $500M has a ripple effect throughout the industry.
- It suggests higher sponsor-to-sponsor transaction feasibility in the future.