A Brave New World For Private Equity

Whilst Aldous Huxley was mainly concerned with state control over technology, his concerns could apply equally to the macro-economic position which the world finds itself in at the moment.

The threat of recession, interest rates having risen from historic low levels, disrupted supply chains, falling demand from consumers, concerns around bank/financial system stability and a myriad of other issues have resulted in a slowdown in mergers and acquisitions (M&A) activity. This has also impacted private equity (PE) firms who saw a marked drop in deal activity, especially in Q3 of 2022.

There is however good news and opportunity within the PE sector as a whole. PE firms need to deploy the dry powder which they have held (which according to most sources still sits at record levels) and they will need to be more creative around how they use debt in their structures in order to meet their own and their investors' requirements.