Abundance Of Dry Powder Remains: Increasing Momentum In Q2 Middle-Market Deal Activity


(MENAFN- ValueWalk) Leading international investment bank DC Advisory, which has US offices in New York, Chicago, Washington DC and San Francisco, has published its latest US Private Equity Middle-Market Monitor. The report explores the latest private equity trends, with a comprehensive overview of middle-market deal activity, sector by sector commentary and the outlook for H2 2023.

Middle-Market Deal Activity To Increase In 2023

Key Highlights:

  • Our projections indicate that Q1 2023 will serve as a foundation for significant progress and growth in the future;
  • We expect continued strength in Q2 2023 deal activity , particularly in Infrastructure, Defense, Education,
    Healthcare, Technology and ESG-related sectors
    , with transactions elsewhere potentially accelerating in volume as summer approaches ;
  • Private equity will need to realise as well as invest. Once the market has fully stabilized, the impact of exogenous factors is better understood, and a new valuation reality is established, decisions can be made – we anticipate these factors coming together in Q2-Q3 to drive H2 activity;
  • 2023 deal activity is likely to increase sequentially as fierce competition returns to the middle-market , especially for exceptional assets and the now attractive smaller 'bite size' yet high quality situations, leading the way back;
  • Beyond the highest quality assets, we see momentum building for stabilization (albeit at a 'new normal'), as the year progresses – investors and lenders are continuing to prepare to transact on the significant backlog of saleable businesses.

A a quote from Scott Wieler, CEO of DC Advisory US:

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“2023 has started as we predicted, with a path to the 'new normal' truly being carved out: the bid/ask spread is narrowing; pressure on private equity firms to deploy capital is building; and critically, innovation – or 'the art of the possible' – is front and centre for both buyers and sellers.

“With private equity firms facing their most challenging fundraising environment in a decade, we've seen continuation funds and strategic buyers (with access to lower cost capital) providing alternative liquidity options this year, as investors collectively look to capitalize on lower valuations.

“This quarter, founders have been the biggest sellers of businesses – not private equity – indicating that build up of activity we anticipated for H2 2023 is on track. What is clear, however, is that as this new normal is being defined, there are unique opportunities following suit, which with the right advice, can mean an opportunity to really make a difference in the marketplace of the future.”

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