Divestitures rise as PE firms seek value
For nearly a decade, PE investors sought growth over value—a strategy that was rewarded as long as multiples expanded. But higher borrowing costs have capped valuations and sent investors flocking to a strategy long out of vogue: divestitures.
PE-led acquisitions of corporate divestitures have risen steadily as a share of all buyouts from an all-time low of 5.7% in Q4 2021 to 12.6% in Q1 2024, our latest analyst note explains. Divested assets tend to be cheaper, allowing firms with a clear valuation strategy to win big at a time when financial leverage is less impactful.
Table of contents
| Key takeaways | 1 |
| Thesis | 2 |
| PE’s shifting playbook | 3 |
| Carveouts were out of favor | 4 |
| Carveout activity rebounds: Why PE firms are buying | 5 |
| Carveout activity rebounds: Why corporate owners are selling | 6 |
| Divestiture deals are smaller and cheaper | 8 |
| Why PE buyers like divestiture buyouts | 10 |
| The profile of divested assets | 12 |
| Carveout case studies | 13 |
| Carveouts by backing status | 16 |
| Outlook | 17 |