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Inside Bain’s 2024 Private Equity Report

Bain's Hugh MacArthur shares key insights from their 2024 Global Private Equity Report


I find it challenging to simply talk about 2023 in private equity as a year unto itself. Really, you have to talk about 2022 and even 2024 to make sense of it.

 

What we’ve seen is three distinct phases of private equity in roughly three years, starting with the massive capital velocity and euphoric dealmaking that kicked off in 2021 and continued through the middle of 2022. Then we had an 18-month period of rapidly rising interest rates in the US and in much of Western Europe.

 

Now we’ve entered a third phase of eerie calm. Are we in a new normal? How do we really feel about the dealmaking environment, and what is that going to portend for things like exits, fund-raising, and returns down the road?


The year 2023 was one of portent. Deal value fell by 37%. Exit value slid by almost half. Fund-raising dropped across private capital, and 38% fewer buyout funds closed.


Interestingly, dollar commitments in buyouts surged as a number of high-performing funds came to market. But it was truly a year of haves and have-nots. Just 20 funds accounted for more than half of all buyout capital raised.


The word for this market is stalled.


The culprit was the sharp and rapid increase in central bank rates, which caused general partners to hit the pause button. The good news? Interest rates appear to have stabilized. Record dry powder is stacked and ready for deployment. Nearly half of all global buyout companies have been held for at least four years. In short, the conditions appear to be shifting in favor of hitting the go button.


We will see what 2024 brings. Hugh MacArthur

Chairman of Bain’s Global Private Equity practice The full report can be found here

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