In September 2023, UBS released a Quarterly Private Markets report. In the US, the internal rate of return for US private equity in Q1 2023 was up to nearly 3%. In H1 2023, it was said that there were fewer private equity deals in the US, compared to 2021. It was said that the total value of these deals also dropped significantly, down by close to 50% from the highest point in late 2021. A take-private is a transaction in which a publicly traded company returns to private company status.
There’s a continued interest in taking companies private. As of June 2023, there were 43 such deals announced, according to Pitchbook. Raising money for new investments is currently slow. It may stay that way till the end of 2023. In H2 2023, there may be an increase in activity there. The difference in the prices that buyers are willing to pay and sellers want is getting smaller. This may be, because the public stock market is said to have improved.
So, buyers may be more confident about the economy. So, they may be willing to pay a price that’s closer to what sellers are asking for, which may be good news for people involved in these investments.In August 2023, buyout strategies raised about $280 billion, according to Preqin. Established buyout managers were said to have fared better in attracting capital, while newer and smaller players have faced hurdles.
And because of uncertainty in the overall economy, companies aren’t being sold or exited as quickly as expected in the world of private equity. This has caused a problem with the flow of money in private equity. Investors have put more money into the investments than they’ve received back. In 2022, US private equity investors were said to see a decrease of about $32 billion in their overall money.
And global secondary deal volume for the H1 2023 was said to be close to $45 billion. This is said to be down 25%, compared to H1 2022.
