What lies ahead for dealmakers in 2023? AE Industrial weighs in, as we launch a new Q&A series

AEI discusses M&A conditions in the A&D sector.

Good morning, dealmakers! It’s Aaron here with Thursday’s Wire.

We’ll get things started today by featuring a fresh Q&A series featuring high-profile private equity pros.

And then we’ll head to Europe to check in with EQT on a recent investment.

Looking ahead. Today, PE Hub is launching a new Q&A series, featuring private equity leaders reflecting on highlights from 2022 and sharing their outlooks for 2023.

The inaugural piece of the series sizes up the aerospace and defense sector, with AE Industrial Partners foreseeing continued favorable M&A conditions in the A&D sector.

PE Hub reporter Obey Martin Manayiti caught up with Kirk Konert, a partner at AEI, a Boca Raton-based PE firm that specializes in aerospace, defense and government services, space, power and utility services, and specialty industrial markets.

Here’s an excerpt from the interview:

What are you looking forward to most in 2023?
I can’t wait to back new founders and companies in our sectors in 2023. The competition for assets has decreased, which will allow us to find great companies to invest behind at better prices.

I am also optimistic that, after some economic pain, the economy will come out of 2023 in relatively good shape and markets will normalize.

What will be the most important trends affecting your dealmaking in 2023?
Given that a lot of what I focus on is driven by government and defense budgets, we will watch the new Congress dynamic closely. If there are no surprises in budgets and political rhetoric, we would expect favorable M&A conditions for the government and defense sectors.

However, I would be remiss not to mention debt availability and cost of capital. Our models have changed in 2022 and will continue to change in 2023. The PE industry, along with sellers, will likely need to be even more creative with structures to get deals done in 2023.

You can read the whole story here.

Over the coming weeks, PE Hub and PE Hub Europe will be producing many installments of the series.

I’ll be working on healthcare sector outlook pieces, so if you are a healthcare investor and want to share some thoughts with me on what you expect in 2023, email me at aaron.w@peimedia.com.

Asia ascension. As you may remember, EQT completed its mammoth merger with Baring Private Equity Asia to create BPEA EQT earlier in October.

EQT is leveraging its new partnership to grow the geographical footprint of Trescal, a provider of regulated calibration services for testing and measurement equipment.
PE Hub Europe editor Craig McGlashan spoke with Thomas Rajzbaum, managing director and head of EQT’s French infrastructure advisory team about his firm entering exclusive negotiations to take a near 75 percent stake in Trescal.

Toronto-headquartered OMERS bought its majority stake in Trescal from Paris-based private equity firm Ardian in 2018, valuing the company at around €670 million. Trescal has since doubled in size, moved into sectors such as life sciences and entered seven markets, including South Korea and Australia. It has also completed 47 acquisitions. The company is now valued at around €1.4 billion, PE Hub Europe understands.

“When the company was with Ardian, it was a very, very different animal,” said Rajzbaum. “What has been done by OMERS in the last few years is to start the Asian journey and to diversify in life science. This is just the beginning. Organically there’s a lot to be done and I’m pretty convinced that we’re going to find new geographies and open new verticals.”

To find out more about EQT’s perspective on what it takes to succeed in Asia and more, read the whole story here.

Free content. Are you signed up for PE Hub Europe? We recently launched the new website, which provides in-depth coverage and exclusive insight on European private equity deals.

Look to PE Hub Europe for:

• The latest deal terms and pricing to bolster your negotiations
• Deal trend analysis to know if a sector is hot or overheated
• Relevant and accurate intelligence on fund manager activity
• Rare insight about fresh investment opportunities & pending deals

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That is a wrap for today, I will be back for the Fri-yay edition tomorrow, when I’ll focus on healthcare deal coverage. Also up tomorrow: a new listicle by Iris Dorbian about PE deals in physical fitness. Get ready for those New Year’s resolutions!

Until tomorrow, happy dealmaking!