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US PE Breakdown

Q1 2023

US PE Breakdown

April 11, 2023

This report was reuploaded on April 27, 2023, to remove a chart and update the analysis on page 10.

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Banking crisis tests US PE’s vision for private credit

While much of the financial system, including VC, turned head over heels in March, it was business as usual for private equity dealmakers. Although some firms eyed the Silicon Valley Bank’s loan book as a potential means to expand their private credit offerings when the bank collapsed, they failed to land a deal. Megabuyouts, add-on deals, and secondaries alike were unencumbered by the panic. 

Of course, it’s never simple: PE deal value in Q1 rose over 11% from the previous quarter, while the total number of deals fell more than 9% and exit activity deteriorated. The latest edition of our US PE Breakdown report, sponsored by Stout, G-P, and Barings, offers insight into what went right for private equity in Q1 2023 while VC was paralyzed and public equities and fixed-income markets floundered.  

Takeaways include: 
  • Tech take-private buyouts in Q1 were financed with less debt than in recent history. Notable deals from March required 70% to 92% equity contributions, much higher than the typical median equity contribution of around 48%.  
  • PE deal prices are in full correction mode. The enterprise value/revenue multiple for buyouts slipped to 1.7x in Q1, down from multiples of 2.4x in 2022 and 2.5x in 2021. 
  • Exit count and value declined for the third straight quarter as investors balked at selling portfolio companies at lower valuations. Corporations proved popular counterparties in Q1, making up nearly 70% of all buyers of PE assets. 

Table of contents
Executive summary: The stress test 4
A word from Stout 6
Deals 8
Deal valuation and debt metrics 15
Deals by size and sector 16
Spotlight: 2022 Annual Global Private Debt Report 18
A word from Barings 21
Exits #
Fundraising and performance #