While the need to sell and redeploy capital strengthens the outlook for private equity and M&A, capital raising is fraught with new delays and geopolitical tensions threaten severe disruptions.
These points were made at pemacom, one of the world’s preeminent pan-European private equity and M&A conferences, which was held Sept. 19 in Munich.
Key takeaways from the conference include:
- A significant amount of dry power remains on the sideline and will need to be deployed in the near term. Similarly, there is a pent-up demand to sell assets that have been held by private equity funds longer than expected. This is expected to result in a material increase in M&A activity in the next few years, much of which will be driven by the middle market.
- Although the broader global credit markets remain challenging, sponsors and investors are turning to private credit and other sources of financing to fund transactions. This trend is expected to continue into the near future as regulatory measures focused on banks will make it harder for them to lend. Syndicated transactions remain challenging for platform acquisitions, and the broader debt market has remained focused on incumbent facilities and higher-priced refinancings.
- Capital raising is proving to take much longer, with limited partners reducing their commitments from where they were the last several years.
- Political tensions with China, the war in Ukraine and the U.S. presidential election could all significantly disrupt the markets.
The conference was attended by more than 350 private equity and M&A professionals from the United States, Asia and Europe, and it covered topics including M&A markets, fund finance, ESG, energy and infrastructure, health care and more. Reed Smith was a proud lead sponsor of this year’s event. Watch this video to learn more.