Forecast: 2017 US PE deal flow steady, company quality suspicious
January 19, 2017
In the wake of a particularly eventful year, the US private equity industry is in many ways returning to normal levels, although significant concerns remain. Multiple factors combined to drive down deal flow throughout 2016, resulting in a distinct decline in activity even as total deal value remained robust on a historical basis. Unlike what happened with the downward shift in the buyout cycle between 2015 and 2016, however, expect PE investors in the US to go forward in 2017 at a pace similar to last year's.
At the same time, portfolio company quality is still a concern when it comes to exits, given the stagnation in exit activity even as prices stay high. In the 2016 Annual US PE Breakdown, our analysts identify several key takeaways from last year that shaped 2016 and will continue to affect this year, among which are:
Pricing stifles deal flow in 2016
Median equity contributions jump to 5.4x EBITDA
Tech and energy investment experience growth
Heightened company inventory limits available targets
Grounded in datasets covering everything from fundraising to transaction multiples, this Breakdown, produced in partnership with Merrill Corporation, delves further into those key points and more.