Insights on Future Private Equity Deals

The private markets reset is here and it’s getting more competitive. The fog is clearing and there is a power reshuffle across the ecosystem: 💥 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗶𝘀 𝗺𝗼𝘃𝗶𝗻𝗴 𝗱𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝘁𝗹𝘆  • LPs are no longer just passive. They’re building liquidity through secondaries and buying stakes in GPs themselves.  • Fundraising? Still tough. But smart midmarket players are thriving while mega-funds stall.  • Retail and high-net-worth investors are quietly fueling new AUM channels via evergreen and semi-liquid structures. 📉 𝗧𝗵𝗲 𝗼𝗹𝗱 𝗽𝗹𝗮𝘆𝗯𝗼𝗼𝗸𝘀 𝗮𝗿𝗲 𝗯𝗿𝗲𝗮𝗸𝗶𝗻𝗴  • Financial engineering alone isn’t enough. Exit backlogs are worse than they've been in two decades.  • IRR isn't the only metric anymore MOIC and real distributions matter more than modeled upside. 🚀 𝗪𝗵𝗮𝘁’𝘀 𝘄𝗼𝗿𝗸𝗶𝗻𝗴 𝗻𝗼𝘄  • Deals over $500M are surging. Sponsors are writing bigger checks with more conviction.  • Operators are doubling down on real value creation with AI-enabled ops, cash generation, and exit prep that starts years in advance.  • Public-to-private is back. Expect even more as sponsors look for undervalued public gems. 🧠 𝗪𝗵𝗮𝘁’𝘀 𝗻𝗲𝘅𝘁?  • Expect more verticalized GP platforms, continuation vehicles, and cross-border carveouts.  • Watch for Asia's rebound (post-China retrenchment), and the continued rise of AI in fund ops.  • And if IPOs remain frozen, expect long-term corporate acquirers to gain leverage.  • 2025 isn’t about waiting for better conditions. It’s about proving you can win in these conditions. #PrivateMarkets #PrivateEquity #Fundraising #Secondaries #LPstrategy #OperationalExcellence #GPstakes #VentureCapital #AIinFinance #NextGenPE

Private Thoughts From My Desk ……………. #33 𝐓𝐚𝐫𝐢𝐟𝐟𝐬 & 𝐔𝐧𝐜𝐞𝐫𝐭𝐚𝐢𝐧𝐭𝐲: 𝐖𝐡𝐚𝐭 𝐈𝐭 𝐌𝐞𝐚𝐧𝐬 𝐟𝐨𝐫 𝐏𝐄 𝐑𝐢𝐠𝐡𝐭 𝐍𝐨𝐰 After five years of what I can only describe as "unique disruptions"—a global pandemic, unprecedented inflation, interest rate shocks—we now face yet another: a new wave of tariffs. For private equity, the impact of these policy moves isn’t just about the numbers—it’s about the uncertainty they inject into long-term models. Private equity lives and dies by its ability to predict the future—five years at a time, with leverage. So when policy shifts like these arrive without clear direction or a timeline, deal pipelines stall. It’s not that the tariffs themselves are necessarily fatal—it’s that no one knows what game we’re playing, or how the rules might change again next quarter. We entered 2025 with momentum. Intermediaries were busy, due diligence was in high gear, portfolio companies were readying for exit. But in February, the “T word” started surfacing. Tariffs are just another word for uncertainty—what I call the dreaded “U word” in private equity—and everything slowed. Activity now reflects what we’re hearing every day: it’s hard to make long-term bets when you don’t know what to model in the short term. For LPs, the liquidity crunch is especially acute. Liquidity is at levels we haven’t seen since the Great Recession. Many LPs are rebalancing through secondaries; some are exploring NAV loans and other creative strategies. The ones with dry powder—sovereign wealth funds, select family offices—see dislocation as opportunity. But for most, frustration is mounting. Fundraising is feeling the pinch, see the chart below for buyout fundraising trends. Exit activity is a leading indicator—and right now, that indicator is flashing yellow. Fundraising was always going to be challenged in 2025. Now, recovery may be deferred even further. So what can GPs do? It’s back to basics (again) with portfolio companies: secure the balance sheet, conserve cash, and avoid covenant or financing issues in the near term. There’s also renewed urgency to get EBITDA up—quickly—through pricing, cost reduction, and working capital optimization. Anything that opens the door to a liquidity event in the near term. This is also a time for firms to solidify their long-term strategy. Some are asking whether it’s time to double down on what they do best and exit non-core strategies. Consolidation is no longer theoretical—it’s a daily conversation, especially for firms caught in the increasingly challenging middle market. This isn’t a crisis. But it is a moment of reckoning. In a market defined by scarcer capital, talent, and investment opportunities—not everyone wins. Knowing what you do best, doubling down on it, and charting a clear path forward for your firm are more essential than ever. #privateequity #privatemarkets #privatethoughtsfrommydesk

Private Equity deal activity is rising, but so is the urgency to put capital to work and generate returns. 95% of PE firms report evaluating more deals than a year ago, driven by record dry powder and an improving rate outlook. Yet, firms are navigating a tightening deal environment that demands sharper execution. 𝗛𝗲𝗿𝗲’𝘀 𝘄𝗵𝗮𝘁’𝘀 𝘀𝗵𝗮𝗽𝗶𝗻𝗴 𝗣𝗿𝗶𝘃𝗮𝘁𝗲 𝗘𝗾𝘂𝗶𝘁𝘆 𝗱𝗲𝗮𝗹𝗺𝗮𝗸𝗶𝗻𝗴 𝗶𝗻 𝟮𝟬𝟮𝟱: 📉 Economic Uncertainty is Adding Complexity: Inflation concerns and potential tariffs are lengthening the due diligence process but not slowing deal activity. Investors are taking a more disciplined approach to structuring transactions. 💰 Interest Rates May Stay Higher for Longer: KPMG US economists now anticipate rates staying flat until mid-2026, requiring firms to adjust financing strategies and balance capital deployment with cost of capital realities. 🔄 The Clock is Ticking on Alternative Liquidity Options: Secondary transactions and continuation funds have provided temporary relief, but investors expect real liquidity. Firms must sell long-held assets and return cash—holding out isn’t a long-term solution. One notable shift: AI is now a core part of Private Equity dealmaking. 85% of PE firms are already implementing or planning to implement Generative AI—up from 61% last year—using it to streamline deal sourcing, enhance due diligence, and accelerate post-merger integration. As competition for high-quality assets intensifies, AI is becoming a critical tool for efficiency and insight in the M&A process. With capital to deploy and exits to deliver, private equity firms face a pivotal year. The fundamentals for dealmaking remain strong, but firms will need to execute with agility and discipline in an evolving market. Read the full KPMG 2025 M&A Deal Market Study: https://lnkd.in/g5JAhcuG. #KPMGPrivateEquity #MergersAndAcquisitions #PrivateEquity #CorporateStrategy #ValueCreation

Private equity funds are sitting on over $1 trillion in dry powder. And yet deals are more selective than ever. What changed? The environment. Four years ago: Low interest rates, predictable trade policies, stable regulatory conditions. Today: Higher borrowing costs, tariff uncertainty, recession signals on the horizon. When the cost of capital rises, required returns increase. When policy becomes unpredictable, risk premiums go up. And when markets feel unstable, selectivity tightens. Make no mistake - the money will be deployed. PE firms don't get paid to sit on cash. But they'll wait until there's clarity and confidence. This creates a unique tension: More capital chasing fewer deals should drive up valuations. But only for high-quality companies that clear the new bar. If your business is insulated from trade disruptions, generating predictable cash flow, operating in stable markets, and led by a strong management team, you're in a strong position to go to market now. If your business is dependent on imported materials, exposed to economic swings, capital intensive, or heavily owner-dependent, you may be better off waiting and strengthening your position first. Timing has always mattered. But in today's environment, industry-specific timing may make or break your outcome.

I've been talking to several PE deal partners and operating partners lately about how they are adapting to the rise of AI, and these discussions consistently highlight the opportunities and challenges ahead. It's clear that today, private equity and private credit still operate with significant inefficiency and opacity compared to public markets – a reality many practitioners readily acknowledge. From these conversations, a common picture emerges: data is often siloed and sparse, processes remain predominantly manual, and success still hinges heavily on personal networks. Many confirm that Excel spreadsheets and ad-hoc workflows continue to dominate their operations, serving as that fragile "glue" connecting disconnected data sources. The lack of universal data standards is frequently cited as a source of errors and a barrier to truly data-driven decisions. We often discuss deal sourcing. The traditional reliance on relationships and intermediaries, while valuable, is acknowledged to limit opportunities and potentially introduce biases or lead to missed deals. Even with CRM systems like Intapp DealCloud , portfolio analytics solutions like 73 Strings, and other emerging data tools, the sheer effort investment teams spend on manual data aggregation remains a significant pain point shared by many I've spoken with. Similarly, the due diligence process – sifting through thousands of pages in data rooms over weeks – is universally described as laborious. Post-investment tracking, typically done quarterly and retrospectively, offers limited real-time insight, making early issue detection difficult – another area where practitioners see room for improvement. These aren't just minor inconveniences; they represent real costs, felt across the firms I've engaged with. However, what's also evident from these discussions is that after decades of operating as an "analog" industry, private markets are genuinely starting to embrace digital and AI-driven transformation. The deal and operations partners I'm speaking with, particularly at mid-market PE funds, increasingly recognize AI and advanced analytics not just as novelties, but as essential tools for enhancing operational efficiency and gaining a competitive advantage. Though they often admit adoption within their own firms is currently nascent, they see the landscape changing rapidly. Compelling case studies demonstrating significant efficiency gains are being shared and discussed. The strong sense I get is that as AI continues to prove its value in enhancing transparency and streamlining these historically opaque processes, the competitive imperative will grow: adopt AI or risk falling behind. It's a fascinating, critical transition unfolding in real-time.

Some very key insights regarding private equity in 2024 from PitchBook worth perusing: Private Equity Fundraising and Deal Activity - The largest publicly traded PE firms saw strong inflows into their funds in 2024 compared to the previous year, primarily driven by private credit strategies. - However, the weak exit environment from 2023 carried over into 2024, with sponsors underwhelming with realizations and exits for buyout funds and other core PE strategies. - Private credit strategies remained highly attractive, accounting for 69.8% of total fund inflows! - Private wealth and insurance channels were major contributors, making up an estimated 47.8% of private credit fundraising in 2023. Buyout Funds Outlook - The tailwinds that boosted buyout fund performance over the past decade are expected to subside in the coming years for large, high leverage buyouts counting on financial engineering for returns. - While buyout deal activity rebounded slightly in early 2024, it remained below historical averages and is likely to stay muted until interest rates decrease, but will remain robust in the small, middle buyout and growth equity markets where leverage is limited in use. - The continued migration by institutional investors towards independent and fundless sponsors transactions that pursue small, middle market buyout and growth strategies is expected to continue unabated. - Strong economic growth, low unemployment, and above-target inflation have shifted the Federal Reserve's focus away from lowering interest rates, which has a material impact on the buyout market. Venture Capital Sentiment - Venture capital fund managers are more optimistic about fundraising and the IPO market in the first half of 2024 compared to a year ago. - GPs expect asset valuations to become more attractive over the next month, supporting market activity albeit at subdued levels, but will negatively impact the valuation of their current holdings! - While AI remains a top focus area, some investors have expressed concerns about overinvestment in the sector. - Interest rates and the need for founders to temper valuation expectations remain key determinants of market activity. - While some managers have delayed fundraising plans or ruled out opening new funds, the majority cited no changes to their current fundraising plans. In summary, private equity fundraising saw a major boost from private credit strategies in 2024, but buyout funds continued to face challenges from the weak exit environment and high interest rates. Venture capital sentiment improved, with expectations of more attractive valuations, but concerns remained around overinvestment in AI and the impact of interest rates and valuation expectations. #privatecapital #privatemarkets #privatecredit #independentsponsor #fundlesssponsor #buyout #growth #growthequity #institutionalinvestor #sponsor #privateequity #gp #lp #familyoffice #hnw #uhnw #ria #registeredinvestmentadvisor #macroeconomic

𝗪𝗵𝗮𝘁’𝘀 𝗼𝗻 𝘁𝗵𝗲 𝗿𝗮𝗱𝗮𝗿 𝗳𝗼𝗿 #𝗞𝗣𝗠𝗚𝗗𝗲𝗮𝗹𝗔𝗱𝘃𝗶𝘀𝗼𝗿𝘆 𝗮𝗻𝗱 #𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆 𝗳𝗼𝗿 𝟮𝟬𝟮𝟱? The deal market is poised for a turning point. With interest rates dropping and seller-buyer valuation gaps narrowing, 2025 is shaping up to be a year of opportunity for dealmakers. Private equity is leading the charge. With record dry powder to deploy and mounting pressure to exit aging portfolio companies, we expect their activity to accelerate quickly. Meanwhile, corporates are addressing various challenges—balancing tech disruptions like AI, geopolitical challenges, and supply chain concerns. Activist investors are pushing them to focus on core operations, leading to strategic divestitures and acquisitions aimed at profitability and resilience. The conversations I’m having with corporate dealmakers reflect this urgency. They’re prioritizing moves that align with their long-term strategies—whether that’s buying assets to drive growth or selling non-core operations to sharpen focus. All signs point to stronger tailwinds for M&A in 2025. The stars are aligning for a year of strategic, impactful dealmaking. #Mergers #Acquisitions #DealAdvisory #KPMGDealAdvisory #BigIdeas2025 #PrivateEquity

📈 Strategic Insights for 2024: Navigating the New Normal in Private Markets and Beyond 📊 As growth leaders, understanding the broader business landscape is crucial, especially considering the evolving challenges and opportunities in private markets. A recent article from McKinsey sheds light on "Ten Considerations for Private Markets in 2024," offering valuable insights not just for private equity markets but for middle-market companies across various ownership structures. Key Considerations for 2024: 1️⃣ Normalizing Dealmaking: Expect a balanced growth in dealmaking, influenced by LP-driven pressures and higher interest rates. 2️⃣ Challenging Fundraising Environment: The 'numerator effect' continues, with fresh LP commitments constrained by valuation growth and slow PE exit velocity. 3️⃣ Concentration Among Larger Names: Larger funds may continue to attract LPs in a tight fundraising environment, limiting new-fund formation. 4️⃣ Emphasis on Value Creation: Transformative change becomes crucial for value boost, with low rates and expanding multiples no longer tailwinds. 5️⃣ Evolving Talent Challenges: The industry faces diversity, equity, and inclusion progress, alongside retention challenges in downturns. 6️⃣ Creative Sourcing: Opportunities may arise from family-owned businesses and corporate carveouts, favoring those with deep networks. 7️⃣ Infrastructure Investing Acceleration: Expanding definitions and uncorrelated returns drive increased LP exposure to infrastructure. 8️⃣ Private Credit Growth: Higher rates enhance the attractiveness of private credit, with banks limiting lending. 9️⃣ Real Estate Deal Volume Recovery: Predictability in living, working, and shopping trends may stabilize rents and encourage deal activity. 🔟 Secondaries Market Expansion: Near-record secondary fundraising could influence private markets, offering liquidity solutions for GPs and LPs. Your (and your customers') CEO, CFO, and Board are discussing these items and making decisions on them. These considerations underscore the importance of adaptability and strategic foresight for sustaining growth and achieving business objectives in the changing landscape of 2024. Remember, balance is a Verb: The concept of balance in business is dynamic, requiring continuous adjustment and alignment with evolving market conditions. This perspective is crucial for effectively managing the multitude of factors influencing company and customer decisions. 👇 For a deeper dive into these insights, see the full article linked in the first comment below. Call to Action: What market and economic trends do you believe companies need to be aware of in 2024 that may be currently under the radar? #BusinessStrategy #MarketTrends #PrivateMarkets #VentureCapital #talentmaximization #executivesearch

This week, Mitchell Hollin (Partner at LLR Partners), W'84, WG '89, shared his remarkable journey in private equity with us—from his early days at Apax to leading LLR Partners, one of the best growth equity firms today. He highlighted the evolution of private equity, discussing how the industry has matured and the strategies that have led to LLR’s success, especially in the lower middle market. He also showcased many delas they have completed. LLR Partners invests primarily in growth equity, focusing on industries such as technology, healthcare, and business services. Mitchell highlighted that LLR is currently investing out of its seventh fund, with a significant amount of capital allocated to help companies scale through both organic growth and acquisitions. A central theme of Mitchell's talk was the shift within private equity over the last two decades. He explained that earlier, firms mainly focused on large buyouts and strategic exits to bigger corporations. However, today, private equity firms are increasingly selling businesses to other private equity firms. This phenomenon, previously uncommon, reflects the growing sophistication of the industry and the availability of capital across various stages of company growth. Some key takeaways: - Mitchell positioned growth equity as a unique opportunity within private equity, offering strong risk-adjusted returns. LLR focuses on investing in companies that show solid growth potential (10-25% annually), have recurring revenue models, and possess intellectual property or other competitive differentiators. He also explained how LLR avoids heavy leverage to drive value. - The trend of private equity firms selling to other private equity firms, reflecting a shift in the market over the last 15 years. - How M&A strategies are central to scaling businesses, with LLR completing over 30 acquisitions in the last 18 months! They carefully integrate these acquisitions, leveraging shared services and technology platforms to increase efficiency and drive growth. Mitchell emphasized the importance of alignment between private equity firms and the entrepreneurs or management teams they back. LLR often works with founders who still own a significant portion of their businesses, and a large part of their role involves "professionalizing" these companies. They focus on ensuring the management team is aligned with long-term growth objectives, often through equity incentives and governance structures. A huge thanks to Mitchell for the insights and inspiration with the future leaders in private equity investing! 🙌 #PrivateEquity #GrowthEquity #Leadership #InvestmentStrategies #Wharton #HarrisProgram

In the past few months, we’ve seen a meaningful uptick in talent needs related to increased PE deal flow (PortCo CFOs, CEOs, and M&A leaders). What’s driving this? Here’s what I’m hearing from ECA’s private equity clients: 1. EBITDA MULTIPLES (VALUATIONS) ARE NORMALIZING Lower middle market and middle market EBITDA multiples are slowly coming down as the market corrects itself from the highs seen in 2021/22. As one of my clients put it, “we’re not seeing stupid deals happen like with did after the pandemic.” This creates opportunity. Talk to any savvy investor, and they will tell you that getting the right price is as important as what you do with the portfolio company. 2. STRATEGICS (LARGE CORPORATES) NO LONGER PRESENTING AS MUCH OF A THREAT Starting in Q3 2022, PE deal flow hit a major slowdown, and we suddenly saw large corporate players in the mix on deals where they previously wouldn’t have been in the hunt. They were flush with cash from record profit years, and looking to spend. As those same companies experience a more challenging economic environment in 2023, they are backing away from the table and posing less of a competitive threat on LMM and MM deals. 3. PE IS FEELING MORE COMFORTABLE ABOUT THE LENDING ENVIRONMENT Despite what Fitch is reporting about the US economy, the general sentiment is interest rates have likely topped out, and there is a path (albeit a long one) to lower rates. This is an important component transactions, and a critical source of leverage for PE. If we learned anything from 2008, maybe we should be better that Fitch has downgraded the US… 4. ACTIVITY IS HEATING UP, BUT IT’S NOT A FRENZY SEEN POST COVID There are great deals out there, and the best PE firms are getting aggressive again. You’ll hear a lot about “record levels of dry powder”…yes dry powder is near historical highS, but the vintage of the majority of those funds allows PE investors to be patient. They’ve got some time on their side and they’re going to continue making smart bets. 5. WHAT ARE YOU SEEING?