The private equity market appears to be entering a phase of maturity after significant growth over the past few decades.
Following the political rollercoaster that was 2016, you could be forgiven for expecting a variety of negative market responses from the business community. Whilst the full economic and political implications of these macro factors remain largely unknown, this has only marginally unsettled the private equity community.
Private equity investors have proven their appetite to continue investing through a number of economic cycles, with 2017 proving to be no exception. Statistics for 2017 year-to-date show a steady stream of new deals across the market, barely showing any reduction in deal volumes.
Fighting for quality assets
The need for general partners to deploy capital remains strong with the ever-growing mountain of dry-powder maturing and we expect the fight for quality to continue, providing an element of robustness to pricing.
The cardinal sin in private equity is to return capital to investors, and we would expect pricing for top quality assets to remain high and deal processes to remain extremely competitive. We anticipate continued interest from overseas private equity seeking to take advantage of the favourable exchange rates created by sterling’s depreciation since the Brexit vote.
Private equity entering a new phase
The private equity market appears to be entering a phase of maturity after significant growth over the past few decades. We also see a renewed focus on operational improvement within portfolio assets. As the potential to generate acceptable returns through purely market arbitrage declines, private equity will have to enhance their returns through business improvement.
Download our latest ‘Leading the way’ private equity brochure (PDF) [ 2272 kb ] to see the deals we recently advised on.
For more information on private equity services contact Mo Merali.