Seven trends for Private Equity to consider in 2023

We have identified seven trends that will impact private equity firms and portfolio companies over the remainder of 2023.

Uncertainty is inherent with rising interest rates, high inflation, increased energy costs and the Russian invasion of Ukraine all challenging economic and market stability. Nonetheless, with roughly $2 trillion of dry powder to deploy globally as reported by S&P Global, we remain cautiously optimistic, in particular for the latter months of the year.
 

Private equity resilience over the last four years

Our Private Company Price Index (PCPI) data demonstrates private equity's resilience and ability to be creative in putting capital to work over recent years.

There was a relatively short-lived dip in activity in the middle of 2020 as the global economy adapted to a new operating environment and the resultant pent-up demand contributed to the highest levels of M&A for years in 2021. The geopolitical climate, inflationary pressures and the relative availability of debt brought deal activity back in line with pre-pandemic levels in 2022.
 

Source: BDO PCPI
 

It is a similar story when considering pricing/multiples. There was an impact as the pandemic hit, which affected private equity more than trade, but this was followed by swift recovery due to the competitive market for deploying capital. Currently, a valuation gap between buyers and sellers remains in some sectors so it will be interesting to see how this trend develops.
 

Source: BDO PCPI
 

Private Equity trends for 2023


Each quarter we collect data surrounding Enterprise Value (EV) to Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) multiples. The Index tracks the EV to EBITDA multiples paid by trade and private equity buyers when purchasing UK private companies.
 

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