IPEM Paris 2023 – The world’s private capital hub. Bringing global private equity to the City of Light.
Buyout groups find themselves at a crossroads. Even though M&A deal volume is strong, deal value is falling.Purchase price multiples have fallen 20% from their 2021 peak. And as GPs consider where to put their record amount of dry powder to work, high interest rates mean that a greater frequency of smaller deals are being completed: causing a divergence between deal value and deal count. Year-to-date, the dollar value of M&A activity is down a third. Shopping around for cheaper transactions is likely to be a temporary fashion trend, as buyout partners come under increasing pressure from LPs to put more of their dry power to work. For now though, it seems bargains rather than trophy assets are the preferred option.
IPEM Paris 2023 – LP-Only Sessions. IPEM’s new “LP-Only Sessions” to provide investors with a dedicated day of knowledge sharing.
Europe’s venture capital market has been in somewhat of a freefall this year, with deal value 60% lower than the first half of 2022 and 34% lower than the second half of 2022, according to Pitchbook’s Q2 2023 European Venture Report.Small deals, up to EUR1 million in size, have effectively entered a cryogenic chamber, signaling bad news for companies searching for seed and pre-seed capital, as VC managers focus more on supporting existing investee companies. This has contributed to a slower pace of dealmaking, as the teeth of a higher interest-rate economy begin to bite. Exits too have all but dropped off a cliff, totaling a mere EUR3.5 billion for the first six months of the year. It is enough to give VC managers and their investors a dose of the blues.
Deal-making might be about to get a little harder for PE firms using Citigroup, with news that it is curbing its subscription credit facilities.Not ideal for those who use credit lines to do deals to avoid issuing capital calls to LPs. The bank has decided that PE funds that are not taking advantage of its wider range of products and services will have the credit tap turned off. Could this become a wider trend as US banks assess the profitability of PE funds? It might be a stretch to call this a credit crunch, but it could place some GPs in an awkward position if they wake up to find that their subscription has been canceled.