Presentation: Next-generation Mergermarket
Opening keynote address
US private equity outlook – cautious optimism
Private equity dealmaking in the US continues to be impacted by heightened interest rates, inflationary pressures and economic and geopolitical instability, affecting fundraising, deployment and exit activity. According to Mergermarket data, North American leveraged buyout volume dropped to 21% to USD 176bn in 2023, the lowest total since 2020, spurred by high financing costs and a valuation gap between buyers and sellers. However, with expected interest rate cuts and dealmakers facing increased pressure by their investors to put dry powder to work, it is predicted that the deal market will return, with the PE market entering a new growth cycle in 2024. Our panel of leading GPs will unpack what to expect in the year ahead.
- How are macro and regulatory headwinds continuing to impact dealmaking and what are the main drivers of deal flow in the US? Will we see more corporate-carve outs and add-ons?
- Which sectors still show promising growth in the next six months?
- How are GPs dealing with the pressure from LPs to return capital in the year ahead?
- Exit challenges- how are GPs finding ways to keep capital flowing, and what are some paths for liquidity for both GPs and LPs? Is 2024 set for a potential rebound?
Hot topic: The growth of private equity secondaries
With traditional exit routes still proving challenging due to macro uncertainties, private equity secondaries, in particular GP-led secondaries and continuation vehicles, have grown from strength to strength in recent years, as LPs search alternative sources of liquidity. Our panel of secondaries experts will take stock of the growing LP and GP secondary market in the US, and touch upon fundraising and changing dynamics as more mainstream PE players enter the space.
- What is fueling the growth in GP-led secondaries in the US?
- How can secondary buyers continue to take advantage of market volatility?
- Will fundraising for secondaries funds continue to reach new highs in 2024?
- As more private equity players embrace the market, what are some challenges to be aware of, and how is the industry changing?
Private credit’s time to shine
The private credit asset class continues to be the fastest growing segment of the alternatives market, and this is expected to continue in light of high interest rates, pushback in traditional lending and a challenging private equity exit environment. Institutional investors have increasingly turned their attention to private credit strategies, with the asset class capturing a larger share of LP portfolios, whilst an increasing number of GPs are tapping into strategic opportunities and establishing private credit funds of their own. Will this momentum continue, and how will this impact the private equity market? Our panel of private credit managers will discuss the opportunity set.
- How are GPs and LPs thinking of the private credit market in today’s changing interest rate environment? Will it continue to be a compelling investment opportunity in the year ahead?
- Are more GPs pivoting from traditional buyouts to private credit funds, despite lower returns?
- Private equity vs private credit portfolio construction- will we see a shift in private credit allocations increasing at the expense of private equity allocations?
- What are some challenges associated with private credit that market entrants need to be aware of?
Fireside chat: Implementing AI in the PE industry – a friend or a foe?
The increasing importance of value creation and portfolio management
As the pace of exits continues to be impacted and interest rates and cost of capital remain high, private equity firms have seen longer holding periods as well as increased competition for attractive targets. This in turn has meant that operating partners are now ramping up their efforts on strategic and portfolio company operational improvements as a key driver of returns. Our panel of experts will discuss how to best approach value creation and portfolio management in today’s rapidly changing market.
- Macro view: whilst alpha-generating avenues remain challenging to access, how are GPs rewriting their value creation playbooks?
- How are PE firms and their portfolio companies maximizing efficiencies through technology investments, such as machine learning and AI capabilities, and is AI disrupting portfolio companies in any way?
- From supply-chain management to human capital- what value creation levers are operating partners focusing on as we head into 2024?
- Are LPs becoming more focused on their managers’ operational capabilities?
Technology PE investments- a bright spot
According to Mergermarket data, the technology sector has remained a dominant investment theme for the private equity industry, accounting for 34% of all investment activity in the US in 2023, and despite higher costs of capital it is expected that investment into the sector will remain resilient, especially given the large amounts of dry powder available for deployment. Our group of technology GPs will discuss the latest dealmaking trends in the sector and how they are continuing to capture opportunities for long-term strategic growth.
- What have been the main drivers of technology deal flow, from software to cloud computing?
- To what extent has AI already impacted the PE investment space, and how can fund managers tap into the opportunity set?
- Will private equity continue to dominate public-to-private transactions in the technology space?
- What are some top technology investment trends for 2024?
Institutional investor insights – in search of liquidity
Whilst the denominator effect has been largely addressed, continued geopolitical tensions, macro uncertainties and liquidity constraints are just a few of the issues that are top of mind for today’s private equity investors. Although LPs remain committed to the asset class, they are increasingly pressuring GPs to return capital and sell off portfolio holdings to recapture some equity, and GP-LP negotiation dynamics have shifted in favor of the LP in recent years. What will 2024 hold for LPs as they search for meaningful alpha? Our panel of top allocators discuss their strategies for the year ahead.
- How are LPs tackling today’s environment, especially given liquidity issues? Has LP bargaining power increased?
- Are LPs looking for more portfolio diversification and new managers, and has there been a shift away from private equity towards other asset classes?
- Which strategies have been more popular amongst North American LPs, and will co-investments remain popular? Is NAV financing still a strategy that LPs are on board with?
- What is the outlook for the year ahead?
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