In 2024, private equity (PE) showed notable recovery in Q2, with deal activity rebounding to its highest levels since mid-2022.
According to EY, Q2 witnessed 122 deals valued at $196 billion, nearly double Q1’s $100 billion.
April and May – Lower Price Triggered Deals
April and May were particularly strong, each surpassing $70 billion in transactions. This resurgence is a significant shift, driven partly by sellers lowering asking prices to bridge the valuation gap that had stalled deal-making.
Notably, 67% of sellers dropped their prices, with 33% of deals finding a middle ground between buyer and seller expectations.
Take-Private and Sector Shifts
Take-private deals surged in 2024, with 41 announced in Q2—doubling Q1’s figure—valued at over $100 billion, representing more than half of the quarter’s total deal value. This rise is attributed to the concentration in public markets, particularly in the US, where six tech stocks comprise 30% of the S&P 500. PE firms identified growth opportunities in companies overlooked by public investors. Emerging sectors like sports also attracted attention, with PE firms deploying $50 billion across nearly 500 sports deals since 2019.
AI Investments Tripled – Mostly in Infrastructure
PE’s interest in AI and machine learning continued its upward trajectory.
By mid-2024, $17 billion was committed to AI-related investments, triple the amount in 2023.
The bulk of this investment (77%) went to AI software and consulting, while consumer and healthcare applications also garnered significant attention.
Notably, firms focused on IT infrastructure critical to AI, such as data centers, announced 30 deals exceeding $1 billion in the past five years.
Fundraising and Exits – Top 20 Funds Win. Rest Sluggish Compared to 2022 and 2021.
Exit activity picked up slightly in Q2 2024, with $113 billion in exits, compared to $79 billion in Q1. However, the market for exits remains sluggish compared to 2021-2022 levels.
Fundraising has also concentrated on top-tier funds, with the top 20 funds accounting for 61% of the $300 billion raised in 2024.
References:
• Alpha Sense Blog
• EY Pulse
• PWC Trends
• CBH Mid-Year Report
