DC Advisory US Private Equity Mid-Market Monitor – Dealmakers Optimistic

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DC Advisory US Private Equity Mid-Market Monitor – Dealmakers Optimistic; Slow Q1 With Pockets Of Strength In H1 Before Acceleration Into Summer

Leading international investment bank DC Advisory, which has US offices in New York, Chicago, Washington DC and San Francisco, has published its latest US Private Equity Mid Market Monitor. The report explores the latest private equity trends, with a comprehensive overview of mid-market deal activity, sector by sector commentary and the outlook for 2023. 

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Private Equity Mid-Market Deal Activity

“2023 has started off as an exciting time for private equity and M&A, with settling market conditions paving the way for transformation to a ‘new normal’. Despite past challenges the market has faced, dealmakers are optimistic about the future, and corporate growth imperative is stronger than ever.” - Scott Wieler, CEO, DC Advisory US.

2023 - First half

  • As 2023 opens, notwithstanding the genuine pain that the current economic situation is causing, the mood in the market feels more positive than it did just a month ago.
  • Hesitation is likely to lead to a slow first quarter, we anticipate a marked increase in:
    • Bilateral, high-confidence transactions.
    • Strategic buyer only processes.
    • Greater overall participation from strategics.
    • A more limited number of PE fund buyers included in lists for transactions.
  • We expect pockets of strength in H1 2023 deal activity, particularly in the Defense, Education, Healthcare, Technology and ESG-related sectors, with transactions elsewhere potentially accelerating in volumes before the Summer.

2023 - Second half

  • In 2023, private equity will need to realise as well as invest. Once the market is perceived to be stable, the impact of inflation is better understood, and the new valuation reality is established, decisions can be made – and we anticipate that happening in Q2 to drive H2 activity.
  • 2023 deal activity will likely increase sequentially with fierce competition in the mid-market, especially for exceptional assets, leading the way back.

2023 Outlook

  • We anticipate that levels of deal activity in the first six months of 2023 will be level with H2 2022 levels, but we see momentum building for stabilization (albeit a ‘new normal’), as the year progresses – investors and lenders are preparing to transact on the significant backlog of saleable businesses.

Read the full report here.