PE Pulse: Five takeaways from 4Q 2022

PE Pulse is a quarterly report and corresponding podcast miniseries that provides analysis and insights on private equity market activity and trends. 

Visit Private Equity 4Q report to view this quarter’s summary and infographic.  

2022 was an incredibly dynamic year for the private equity (PE) industry, characterized by growth, innovation, creativity and the trademark resiliency that has defined the industry since its inception. The first half of the year saw a deal environment that carried over much of the momentum from 2021’s record levels of activity. The second half of the year, however, saw PE firms become increasingly cautious in the face of rising inflationary pressures, the macro impacts of the war in Ukraine, a widening valuations gap, and widespread dislocation in the financing markets that restricted access to PE’s traditional sources of financing. 

Key takeaways:

• Despite the drop-off in announced deals over the course of the year, deal values closed 2022 well above pre-pandemic averages.
• Add-on deals have averaged about 50% of total PE activity versus platform investments; right now, they’re about 60% of the total PE market.
• Firms announce about 80 take-private deals valued at more than US$262b in 2022.
• Bloomberg reported a few weeks ago that there was more than US$40b of hung deals sitting on banks’ balance sheets. Although not all of that is PE – the effect’s been the same. Higher spreads, increased costs of financing.
• 2022 was private credit’s time to shine and it’s really going to be the inflection point for private credit, and that’s going to be one of the real legacies of this period of volatility.

For your convenience, full text transcript of this podcast is also available. Read the transcript.