Private Equity & Transactions 2023

If 2021 was the all-time deal-making peak and 2022 brought instability and macro-economic tempests, what did 2023 bring?

Inflation was generally more pernicious than most had expected, and interest rates rose significantly in most countries throughout the first part of 2023, raising the cost of debt. Combined with economic uncertainty, this made buyers much more selective on what assets they looked at and cautious on valuations on those opportunities they did pursue. Consequently, completed deal activity across the market in H1 23 was well below that of the same period the previous year and remained muted for the rest of 2023.

Yet, we also see investors adapting to the changed deal-making environment. Buyers are focusing on high-quality assets with strong fundamentals (an important precursor to get past the higher levels of scrutiny from investment committees) – and placing greater emphasis on profitability rather than a sole focus on growth.

And while the macroeconomic environment may have not got much easier, investors have got greater clarity on how these dynamics are playing out and the implications for potential investments.

On the sell-side, we are seeing a greater focus on better and earlier exit preparation – to build and prove more robust value creation plans and to give options and flexibility on the timing and nature of exits.

What does 2024 have in store?

In a world that has been so uncertain and unstable over the last few years, we’d be cautious on making bold predictions for 2024 – geopolitics, the many national elections taking place this year and the future development trajectory of AI all inject substantial uncertainties into the outlook. But there are perhaps some encouraging signs from the taming of inflation, plateauing of interest rates and trajectory of increasing activity we see in the market.

Against this backdrop, we believe the need for depth and robustness in commercial insights to support investment decision-making remains at an all-time high – and we are ready to support our clients in meeting this challenge throughout 2024.

For sector insights and a snapshot of our 2023 Private Equity and Transactions activity see our latest report.

We would also be delighted to share our deep sector and topic expertise with you further on any of the areas highlighted here that are of interest. Simply email [email protected] or reach out to our team directly.