International Comparative Legal Guide – Private Equity 2023 - 2024

For the fifth consecutive year, Dechert is the contributing editor of the International Comparative Legal Guide - Private Equity. The guide, now in its ninth edition, is one of the most comprehensive comparative guides to private equity (PE), serving as a valuable reference source for in-house counsel and international legal practitioners, covering common issues in PE laws and regulations – including structuring matters, governance matters, and transaction terms in 22 jurisdictions.

Members of Dechert’s Global Private Equity practice provide an overview of market trends and an industry outlook for 2023 and beyond, as well as the country chapters relating to the United States and the United Kingdom.

2023 and Beyond: Private Equity Outlook for 2024

Introduction

The global PE industry, after enjoying record-setting years in 2021 and 2022, is now facing macroeconomic headwinds. Inflation and related rising interest rates, a tight labour market in the case of the United States, more robust antitrust enforcement in various jurisdictions, as well as geopolitical uncertainty, and valuation expectations that do not yet reflect the economic realities of the moment have together served to slow PE deal activity. Through the first half of the year, 2023 PE deal activity in the United States, Europe, and Asia lags behind that of 2021 and 2022 in terms of deal count and deal value. Similarly, fundraising activity is down overall in 2023 so far. However, even as the deal environment is proving challenging, PE sponsors continue to hold record amounts of dry powder to deploy.

Read the full expert chapter "2023 and Beyond: Private Equity Outlook for 2024"

United States: Private Equity 2023 - 2024

Overview

U.S. PE deal activity during the first half of 2023 continued to slow following the surges during 2021 and the early part of 2022. While PE firms continue to have significant levels of dry powder at their disposal, the war in Ukraine, geopolitical tensions with China, regional banking system collapses, stress in the commercial office lease market, inflation and rising interest rate levels have created a more challenging environment for M&A and injected uncertainty into the outlook for the remainder of 2023. Fundraising activity slowed meaningfully in the first half of 2023, with many investors’ portfolios already overallocated to the private markets – a direct result of the declines in the value of public stocks. In addition, risk-averse lenders have made access to debt financing difficult; and with the slowdown in PE exit activity and a lack of GP distributions, LPs have been left with less capital with which to invest in new funds. The foregoing, coupled with a limited number of high-quality assets available in the market, has made the current landscape for PE challenging.

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United Kingdom: Private Equity 2023 - 2024

Overview

A notable trend in the PE market between 2020 and 2022 (among many such trends) has been the number of take-private transactions by PE investors. This demonstrates the amount of dry powder available in the PE markets and the perceived relative value of public listed targets. It also reflects PE investors’ willingness to pay higher premiums due to their ability to maximise the value of such target entities post-acquisition, with fewer administrative and governance hurdles. Further trends have included a larger than usual amount of club deals, with a number of PE firms forming clubs to acquire larger assets.

However, 2023 to date has marked a relative slowdown in PE M&A activity compared with previous years, reflecting (amongst other things) the high levels of inflation in the market and reducing revenues in many businesses.

Read the full chapter “United Kingdom: Private Equity 2023 - 2024”

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