Management consulting firm Bain & Company has released its "Searching for Momentum: Private Equity Midyear Report 2024." The report reveals that private equity continued to decline during the first half of 2024, with few signs of momentum.
The report, based on data through May 15, suggests that private equity dealmaking may have bottomed out, though investments and exits have not returned to normal levels.
According to the report, deal count sharply dropped over the previous two years but appears to be leveling off in 2024 and may end the year flat. The exits' free fall seems to have ended as well.
The report indicates that limited partners continue to exert pressure to pick up the pace of distributions. They are also focusing their new commitments on a "narrow swath of favored funds." Further, general partners who struggle to guide portfolio companies to more attractive outcomes could face a shakeout.
It may be too soon to expect a return to normal, at least in the near term. In 2024, deal value may roughly match 2018’s total, yet there is more than 1.5 times as much buyout dry powder today as there was in 2018. Other than a few large deals, such as the $15.5 billion acquisition of Truist, there is little empirical evidence that the market is rebounding.
Bain & Company surveyed more than 1,400 market participants in March, and about 30% said they don’t expect any pickup until the fourth quarter. Nearly 40% don’t foresee any significant change until 2025.