2024
Global Private Equity Outlook
A year of rising interest rates and slower growth has proved challenging for the private equity (PE) industry. Yet, despite a decline in fundraising and dealmaking coupled with debt becoming costlier and scarcer, successful PE firms are finding a way. Learn what dealmakers need to know as they harvest their holdings and kickstart capital raising to sustain their investment cycles into 2024.
*Based on insights from a survey of 100 senior-level PE executives across North America, EMEA and APAC.
Download The ReporT
Click to download the previous reports
Key Findings
REGISTER NOW!
Dechert's Global Private Equity Outlook Webinar
Join Us December 14th!
Share this page:
Download the full report and insights.
At a glance
believe that interest rates will have the single biggest impact on the deal environment
26%
see market conditions for exits as being either neutral or somewhat favorable
58%
intend to move more towards private credit providers
35%
Representing buyers, sellers and advisers in sophisticated, complex mergers and acquisitions around the globe.
Read about our Mergers & Acquisitions service offering.
Expertise in a broad spectrum of domestic and cross-border financing transactions and debt restructurings.
Read about our Leveraged Finance services.
A leading global private funds practice advising private fund sponsors on all aspects of the fundraising lifecycle.
Read about our Private Funds services.
Exceptional market insight, innovative structuring, strong financing capabilities, market-leading fund formation, regulatory, M&A and tax expertise.
Read about our Private Credit services.
Providing fully-informed advice on both the legal requirements and commercial implications of conventional and innovative fund and transaction types.
Read about our Private Equity services.
PRIVATE
EQUITY
PRIVATE
CREDIT
PRIVATE
FUNDS
LEVERAGED
FINANCE
MERGERS & ACQUISITIONS
How we can help
21% say their biggest challenge in replenishing dry powder is competing against the largest and most diversified GPs
71% expect rising regulatory scrutiny to negatively impact dealmaking plans over the next 12 months
59% intend to make a GP-stake divestiture over the next 24 months
94% of respondents are likely to pursue take-private transactions
Luxembourg and the Cayman Islands are the most popular domiciles amongst respondents, with 59% having funds based in these jurisdictions.
The U.S. regional bank crisis in early 2023 rattled the markets and has exacerbated a trend towards private credit as a financing option across the globe. This has not gone unnoticed at the multi-strategy asset managers and of those who do not already have a private credit financing strategy, 73% are considering adding one. In addition to utilizing private credit to fund acquisitions, private credit can also be used by GPs for fund-level financing as effective tools to improve capital efficiency and rapidly back new acquisitions.
read the article
read the article
READ THE ARTICLE
69% of managers expect the need for co-investment to increase.
In a major reversal from 2022, when only 13% of GPs expressed firm intentions of pursuing take-privates, they are now purposefully scouring the public markets for deals, and almost all say they are likely to consider this option. Given the additional regulatory complexity and public scrutiny of these deals, active engagement of skilled professional advisers from the very start is a necessity, particularly in the U.S., where stockholder-plaintiffs have recently secured significant damages awards in the Delaware courts against acquirors in take-privates.
read the article
78% already make use of private credit for acquisition financing at the portfolio level
50% of respondents view GP-led secondaries and continuation funds as growing trends related to the current economic environment
Luxembourg and the Cayman Islands are the most popular domiciles amongst respondents, with 59% having funds based in these jurisdictions.
read the article
Operational and regulatory complexities likely to be some of the biggest challenges managers face when raising retail capital at scale.
read the article
As antitrust authorities continue to bear down on private equity-led acquisitions and become increasingly litigious, dealmakers are also contending with the focus around the globe on managing the impact of foreign investments – both inbound and outbound – including relative to national security. GPs in North America and EMEA, therefore, view intervention from regulators as a possible threat to their upcoming deals and should take steps to proactively prepare for increased filing requirements and scrutiny
The pursuit of raising capital has become more arduous and requires a creative approach. As institutional investors rationalize the number of their relationships and in some instances downsize commitments, and the U.S. SEC introduces potential fundraising challenges with its new private fund rules, firms are turning their attention to the retailization of alternative investments as a previously untapped reservoir of investor capital. It will be important to evaluate the impact of this strategy shift as it relates to fee structures, and an increased need of administrative capabilities.
GP-stake transactions have become more and more popular. Obtaining liquidity at the GP-level, with growth being the primary motivational factor, this strategy is expected to be most popular among North American PE firms, with 64% indicating an intent to divest, followed by 57% in EMEA and 50% in APAC. GPs can explore this option to raise capital and tap potential expertise, strategic guidance and access to invaluable networks.
GP-led secondaries and single or multi-asset continuation funds activity continues to grow in light of fewer traditional exit opportunities, emerging as an important source of liquidity in the industry’s toolkit. GPs should consider alternative options to traditional exit routes to drive the fundraising cycle and address the liquidity gap.
Chris Field, Co-head Private Equity practice
If a portfolio company gets into difficulties, the GP is only dealing with one lender or a limited number of direct lenders that often have financed multiple companies and have extended relationships across that PE manager’s portfolio.”
Chris Field, Co-head Private Equity practice
There’s clearly distress in the commercial real estate market, with some
prominent investors turning over prime properties to lenders.”
Siew Kam Boon, Co-head Private Equity practice
Barring certain sectors like tech, where you see a lot of down rounds after some astronomical valuations, price expectations in Asia have not dropped in as considerable a fashion despite the current conditions.”
Sabina Comis, Global managing partner
In the challenged market conditions that we’re in right now, LP committee members are going to naturally be inclined to commit to larger well-established funds.”
Sabina Comis, Global managing partner
The London Stock Exchange [is] presenting opportunities for attractively priced assets compared with private markets.”
Chris Field, Co-head Private Equity practice
It is clear that sponsors are making the most of valuation resets in Europe’s stock markets.”
Markus Bolsinger, Co-head Private Equity practice
PE firms can often use the accordion features pre-baked into the existing credit
agreements arranged for their platform companies. But in a lot of cases some
of the conditions can no longer be met.”
Markus Bolsinger, Co-head Private Equity practice
The large, multi-strategy asset managers are already there when it comes to incorporating AI into their deal sourcing investment and fundraising models.”
Sabina Comis, Global managing partner
We’re seeing AI providers swiftly moving into the onboarding space, replacing the existing mechanical, manual tools for distributing the subscription agreements funds need to issue to hundreds of LPs.”
Siew Kam Boon, Co-head Private Equity practice
The data is clear that ESG adoption is past the tipping point and it is increasingly a requirement and expectation.”
Markus Bolsinger, Co-head Private Equity practice
There is something of a recency bias informed by a steady stream of negative data and news, and the experience of weathering recent market conditions.”
Siew Kam Boon, Co-head Private Equity practice
PE liquidity has been comparatively scarce in Asia, limiting GPs’ ability to raise new funds and meet personal commitments to their own funds.”
78%
72%
26%
expect their firms to invest in hedge fund capabilities
of EMEA respondents view their capacity to successfully raise continuation vehicles as a challenge
expect to see more distressed deals in response to today’s prevailing macroeconomic conditions
PRIVATE EQUITY
learn more
learn more
learn more
learn more
learn more
learn more
READ THE REPORT