US PE picks up the pace of exits
July 15, 2023
Our quarterly US PE Breakdown is one of our most widely read reports, and the Q2 edition should be no exception. Packed with 37 pages of charts and commentary, it spans everything from deployment to exits to fundraising and fund performance. It has become a "must read" for anyone operating in the US PE ecosystem.
Here are the top takeaways from this quarter's report:
Also encouraging: Big banks have slowly waded back into the leveraged loan market. After taking an eight-month sabbatical from underwriting any new loans for large take-privates, a trickle of announcements started in February and accelerated in March.
Private credit funds continued to lend all along and were the main reason the LBO market and PE deal flow, in general, did not collapse coming out of the steepest rate hikes in more than 40 years. Instead, the industry has maintained pre-pandemic levels of deal activity, which were considered strong before the 2020 to 2021 frenzy set the bar impossibly high.
We suspect the second half of 2023 will provide its own twists and turns, and will render a verdict as to whether higher interest rates are here to stay — or the industry's journey to a friendlier LBO backdrop is finally complete.
Download the Q2 US PE Breakdown for more data and analysis.
Here are the top takeaways from this quarter's report:
- US PE deal value slipped by 15.8% from Q1 and is down 29.6% for the year; deal count was largely unchanged, pointing to smaller deal sizes.
- Exits were a bright spot for a change, surging by 66.9% from last quarter, the best level since crashing six quarters ago.
- There were four big exits to end the quarter: two via M&A (Adenza and Apptio) and two via IPO (Savers Value Village and Kodak Gas Services).
- Leverage remains scarce. Debt for LBOs plummeted to a 43% share of EV, down from the five-year average of 52%.
- Take-privates got smaller this year. Volumes are brisk, but more than half of all public-to-private deals have clocked in at under $1 billion.
Also encouraging: Big banks have slowly waded back into the leveraged loan market. After taking an eight-month sabbatical from underwriting any new loans for large take-privates, a trickle of announcements started in February and accelerated in March.
Private credit funds continued to lend all along and were the main reason the LBO market and PE deal flow, in general, did not collapse coming out of the steepest rate hikes in more than 40 years. Instead, the industry has maintained pre-pandemic levels of deal activity, which were considered strong before the 2020 to 2021 frenzy set the bar impossibly high.
We suspect the second half of 2023 will provide its own twists and turns, and will render a verdict as to whether higher interest rates are here to stay — or the industry's journey to a friendlier LBO backdrop is finally complete.
Download the Q2 US PE Breakdown for more data and analysis.
Tim Clarke
Lead Analyst, Private Equity
Tags:
Join the more than 1.5 million industry professionals who get our daily newsletter!