【ION Analytics】2024 Global Private Equity Outlook

The global private equity (PE) market has settled into a more measured cadence in recent quarters. Fund managers have been steering through a fundamentally different environment than the one they had become accustomed for the last 15 years.

This report includes insights from a survey of 100 senior PE executives in Asia, Europe and the U.S. on how they are overcoming today’s challenges and setting themselves up for success amid demanding market conditions and industry shifts. 

Highlights include:

  • 26% of respondents believe that interest rates will have the single biggest impact on the deal environment over the next 12 months. Another obvious pain point is rising debt burdens, with 38% citing availability and cost of leverage amid monetary tightening among the top two challenges currently facing the PE industry.
  • 94% of respondents are likely to pursue take-private transactions. In a major reversal from 2022, when only 13% of GPs expressed firm intentions of pursuing take-privates, they are now purposefully scouring the public markets for deals, and almost all say they are likely to consider this option. Given the additional regulatory complexity and public scrutiny of these deals, active engagement of skilled professional advisers from the very start is a necessity, particularly in the U.S., where stockholder-plaintiffs have recently secured significant damages awards in the Delaware courts against acquirors in take-privates.
  • 59% intend to make a GP-stake divestiture over the next 24 months. GP-stake transactions have become more and more popular. Obtaining liquidity at the GP-level, with growth being the primary motivational factor, this strategy is expected to be most popular among North American PE firms, with 64% indicating an intent to divest, followed by 57% in EMEA and 50% in APAC. GPs can explore this option to raise capital and tap potential expertise, strategic guidance and access to invaluable networks.
  • 78% already make use of private credit for acquisition financing at the portfolio level. The U.S. regional bank crisis in early 2023 rattled the markets and has exacerbated a trend towards private credit as a financing option across the globe. This has not gone unnoticed at the multi-strategy asset managers and of those who do not already have a private credit financing strategy, 73% are considering adding one. In addition to utilizing private credit to fund acquisitions, private credit can also be used by GPs for fund-level financing as effective tools to improve capital efficiency and rapidly back new acquisitions.