Patience is a (value-added) virtue

Highly levered PE funds and those looking for a quick exit strategy in 2023 might find their plans hit the skids, as challenging macro conditions compel GPs to hold on to companies for longer. This will require PE fund managers to stay patient and show investors their true worth as value-add specialists, potentially revealing those who relied upon cheap debt and high leverage in previous years to magnify returns. Private equity has always been a long and winding road, so this is unlikely to faze seasoned veterans well used to navigating exit roadblocks. This year could be the time when value creation starts to separate the winners from the losers.