Capstone Partners’ Post

Our latest equity capital raising market update

Private equity is encountering significant challenges amidst a notable slowdown in dealmaking, leaving the industry with a staggering 28,000 unsold companies valued at over $3 TRILLION, according to Bain & Co's annual report. Implications: The evolving private equity landscape presents both challenges and opportunities, urging stakeholders to innovate and strategize effectively to exploit opportunities from alternative fundraising methods and IPO exits. Retrieved from: https://lnkd.in/eYGBbyVA Other Key Notes: - Last year witnessed a 44% decline in the combined value of privately and publicly sold companies, marking the lowest level in a decade. - The value of companies sold to other buyout groups plummeted by 47%, highlighting a stark contrast in asset valuation opinions. - With over 40% of unsold companies being at least four years old, there's growing pressure on private equity firms to prepare for sales, yet liquidity needs remain a challenge. - Amidst difficulties in selling assets, private equity is exploring alternative fundraising tactics such as net asset value financing and internal fund transfers. - Despite challenges, the secondaries market has experienced substantial growth, doubling in funds raised last year. Additionally, the IPO exit route is showing signs of resurgence. #PrivateEquity #Investment #Finance #MarketTrends #Strategy

Private equity firms are shifting focus from financial engineering to operational excellence, leveraging industry experts to drive growth and profitability. In a challenging deal environment with longer holding periods, firms emphasize measurable outcomes like expanded margins, increased cash flow, and sustainable profitability. Success hinges on a blend of skills in marketing, sales, and operations to boost revenue, improve competitiveness, and ensure lasting success. Read more about this transition in private equity: [Link to the article](https://lnkd.in/ekfwGKgj)

Times have changed, and so has the focus of private equity investors. It's no longer just about financial value creation through interest rates and asset prices. Our latest research shows that operational value creation is the new focus, with significantly higher IRR potential for best performers. Investing with operational value creation at the forefront is key. It's not just about one-time improvements, but deep transformation and shared accountability. It's about people, capabilities, and governance. Before signing, it's crucial to understand where to create value during the holding period and beyond, and to align all stakeholders, including management. Interested in learning more about private equity and value creation? Check out our latest research and let's talk about it! #PrivateEquity #ValueCreation #McKinsey #Transformatop

When dealmaking slows down, private equity firms and other investors become more cautious with their investments, leading to a few potential implications for low to mid-market companies: 1. **Lower Valuations**: 2. **Longer Time to Exit**: 3. **Alternative Exit Strategies**: 4. **Increased Importance of Performance**: 5. **Focus on Value Creation**: Each company's situation will be unique, and the impact of a dealmaking slowdown will vary based on the industry, the company's financial health, and its strategic position. Companies looking to exit in such an environment should work closely with business advisors to carefully plan their exit strategy and navigate the challenges of a slow dealmaking market. #businessstrategy #businessexit #businessadvisory

Middle Market Private Equity: Key Facts Middle market private equity (PE) is about investing in companies worth between $50 million and $1 billion. These investments can be very profitable. In the second quarter of 2024, there were 122 deals worth $196 billion, making it the best quarter since 2022. This type of investment is great because it combines smaller companies' growth potential with bigger ones' stability. #PrivateEquity #MiddleMarket #Investment #BusinessGrowth #PEInsights #HighReturns #InvestmentStrategy #BusinessDevelopment #MarketTrends #FinancialGrowth

This article provides a valuable perspective on what private equity companies are doing to improve the performance and value of the companies they invest in. Working in and on your company may be essential rather than just on it. #consulting #private equity #performance #outcomes

“Private equity groups globally are sitting on a record 28,000 unsold companies worth more than $3tn, as a sharp slowdown in dealmaking creates a crunch for investors looking to sell assets. [ ] Last year, the combined value of companies that the industry sold privately or on public markets fell 44 per cent on 2022 to its lowest level in a decade. [ ] This has prompted the industry to use alternative money-raising tactics, including so-called net asset value financing — loans secured against typically highly indebted portfolio companies — and transferring companies to new internal funds. This can allow in new investors while others exit. [ ] The “secondaries” market — of private equity investors buying and selling existing stakes in funds and private equity groups moving assets from older to new funds — was another bright spot. The amount of money raised in the secondaries market nearly doubled last year, with groups including Blackstone and Lexington Partners both raising more than $20bn each.”

2023 was challenging for M&A in the private equity industry, but let's embrace the hope for a brighter future in 2024! Discover the latest trends and insights in Cherry Bekaert's Private Equity 2023 Year-in-Review and 2024 Outlook. Together, we can overcome the challenges and unlock new opportunities. #PE #PrivateEquity #MandA https://okt.to/aV5Zs2

What total amount of assets did private equity firms control globally? These alternative asset managers have seen their assets more than double in the last five years as investors turn to private markets. https://lnkd.in/gFQn7iMP #privateequity #cfo #finance #strategy