There’s been a lot of talk about the slowdown in deal activity this year, but a close look at global private equity acquisitions and exits from the first three quarters over the last five years puts the current lull in context – and suggests that the year may not be as bad as it feels.
Let’s start by acknowledging that 2021 was the best year for PE deals ever, so it’s not a fair comparison. If you are thinking 2021 is the benchmark, then no wonder you feel disappointed in 2022. And at the opposite end of the spectrum is 2020, when pandemic lockdowns halted dealmaking for a while. So that leaves 2018 and 2019 as the most recent years that reflect “normal” M&A activity.
When you look at how the first three quarters of 2022 stacked up against the same period in 2018 and 2019, this year comes out better by most measures.
As you can see from the charts below, based on data provided by Refinitiv and analyzed by PE Hub, acquisition volume and value for the first three quarters of 2022 beat all recent years except 2021.
When it comes to exits, the data on deal value tells a similar story to acquisitions, but the data on exit volume reveals some weakness. Exit volume for Q1-3 in 2022 fell below 2019 and 2018 levels.
More unsettling perhaps is the overall downward trend. By all four measures – acquisition volume and value, and exit volume and value – activity declined in each subsequent quarter in 2022.
Activity in the fourth quarter seems to be continuing the downward trend, based on interviews with dozens of PE sources over the last few months. As one sign of the slow times, we hear that investment bankers are gearing up for their first big winter vacations in years.
We will return in January with data on the fourth quarter and will be sharing reports like this every quarter. Over time, we will be looking at specific sectors and regions.
And in the meantime, to hear perspectives on the slowdown and how factors including rising interest rates are affecting private equity dealmaking, listen to our new podcast series, Private Markets and the End of Cheap Money.
When it comes to exits, the data on deal value tells the same story as acquisitions, but the data on exit volume reveals some weakness. Exit volume for Q1-3 in 2022 fell below 2019 and 2018 levels.
Editor’s note on methodology: Most of the data in the charts and tables above was provided by Refinitiv. In some cases, PE Hub updated or modified information to reflect reporting. Please send questions and comments to PE Hub editor-in-chief Mary Kathleen Flynn at mk.flynn@peimedia.com.
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