Bain & Company's 1H’23 Perspective on PE Tech Climate

August 10, 2023

Stuck in Place: Private Equity Midyear Report 2023, Bain & Company

"Top funds aren’t waiting for clear skies. They are reviewing portfolios, resetting value creation plans, and otherwise working to get things moving again."

With the clock ticking on a record $3.7 trillion in dry powder ($1.1 trillion in buyout funds), alternative asset managers have ample incentive to get moving after four quarters of relative inactivity.

PE firms also face growing pressure to free up the massive glut of unexited portfolio companies jamming the fundraising flywheel.

A few key takeaways from the report:

  • Public markets have rebounded strongly in 2023 with the S&P 500 jumping 16% in the first half and the tech-heavy Nasdaq shooting ahead by 32%.
  • The IPO window has opened a crack, allowing several private equity-backed companies to file offerings.
  • Inflation is moderating in most major economies (with the exception of the UK), and banks are cleaning up their balance sheets.
  • Major lenders have managed to unload more than half of the “hung” leveraged buyout debt they committed to before the economy went sideways.

In the first half 2023, buyout-backed exits fell to $131 billion, a 65% decline from the same period a year ago. On an annualized basis, exit value is tracking down 54%, and exit count is off 30% compared with 2022. The pressure for liquidity is growing.

Continue here to read Bain's full perspective.

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