Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

51347

Buyout deal volume and value begins to normalise: Preqin

RELATED TOPICS​

Data provider Preqin has published its Deal Flow Monitor: Q1 2024 report, examining trends in global sponsor-backed deal-making.

The report finds that while both buyout deal volume and value has decreased from the pandemic high in 2021 of 14,452 total deals closed, deal volume is beginning to normalise at a lower level with 1,780 deals in Q1 2024 (a 14 per cent decline from Q4 2023).

Preqin writes that this normalisation is comparable to that witnessed between 2018 and 2020, when the quarterly average deal volume was 1,930. However, in the long term, Preqin analysts are optimistic about sponsored buyouts, as market share has doubled in over a decade and is expected to continue to grow compared to non-sponsored buyouts that don’t include private equity.

Key report facts:

Private capital deal value: Deal value fell by USD195.3 billion from Q4 2023 to Q1 2024, from USD423 billion to USD227.7 billion, respectively.

Private equity buyout deal activity appears to be normalising at lower level: In Q1 2024, 92 per cent of all deals were through the small and mid-market (<USD100 million – USD999 million) – higher than the five-year average of 89 per cent as higher interest rates and so elevated financing costs persist. Overall, there were 1,210 fewer deals (-14 per cent) from Q4 2023 to Q1 2024. Buyout deal value decreased by 55 per cent from Q4 2023 to Q1 2024, falling from USD209.2 billion to USD94.7 billion, respectively.

Private equity buyouts by sector: Industrials overtook Information Technology (IT) as the sector with the highest deal value globally in Q1 2024. Industrials accounting for USD28.4 billion in deal value in Q1 2024 (30 per cent of total) compared to USD21.1 billion in Q4 2023 (10 per cent of total). The latter took a hit through declining valuations and lower deal leverage and may put downward pressure on future deal value as the fall from the highs of late 2021 and early 2022 continue.

VC deal making forecast: Whilst VC dealmaking continues its downward trend in Q1 2024, Preqin data shows that early-stage deals are becoming more attractive. Deals under USD100 million accounted for 96.1 per cent of the overall VC deal market in Q1 2024 and Preqin analysts see this trend continuing owing to longer incubation periods and less sensitivity to valuations, especially in light of down rounds’ current prevalence.

Gerard Minjoot, Analyst, Research Insights, at Preqin says: “As the market continues to navigate the uncertain macroeconomic environment, deal activity appears to be transitioning into a new normal where smaller deal sizes will be more apparent. Yet, we remain optimistic. Over half of private equity managers and 68 per cent of venture capital managers plan to deploy more capital in 2024, compared to 44 per cent and 36 per cent of them, respectively, in 2023. In the long run, sponsored-back buyout deals have grown over the last decade and will continue to grow in the future.”

Latest News

MSCI has launched MSCI AI Portfolio Insights, writing that it combines generative artificial intelligence “GenAI”..
The Capgemini Research Institute’s World Wealth Report 2024, published today, reveals the number of high-net-worth..
New research from cloud security firm Zscaler reports a disconnect between European company confidence in..

Related Articles

graph
The exodus from hedge funds continues with investors questioning unswayed by relatively strong performance from the alternative asset class...
The exodus from hedge funds continues with investors questioning unswayed by relatively strong performance from the alternative asset class...
Waves
A joint statement from BNP Paribas Asset Management, Federated Hermes Limited, Mirova, Robeco and Storebrand Asset Management has been published, entitled The urgent need for better ocean-related data to make informed investment decisions...
A joint statement from BNP Paribas Asset Management, Federated Hermes Limited, Mirova, Robeco and Storebrand Asset Management has been published,..
Frozen soap bubble
From the end of this month, the UK’s Sustainability Disclosure Requirements (SDR) regime comes into force which the Financial Conduct Authority says has a simple aim: “Financial products that are marketed as sustainable should do as they claim and have the evidence to back it up.”..
From the end of this month, the UK’s Sustainability Disclosure Requirements (SDR) regime comes into force which the Financial Conduct..
Global ESG Investing
On May 15 Florida’s Republican Governor Ron DeSantis signed legislation that furthers his ongoing campaign to oppose the role of climate change and ESG factors in state policymaking...
On May 15 Florida’s Republican Governor Ron DeSantis signed legislation that furthers his ongoing campaign to oppose the role of..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by