Global value of mergers and acquisitions fell below US$3 trillion last year for the first time since 2013
Private equity firms are set to deal with more pressure when it comes to selling assets and returning capital to investors after two years of slow-moving deals, stated a senior executive at Evercore Inc., an investment banking advisory company, as reported in an article by BNN Bloomberg.
Andrew MacNiven, the firm’s head of Canada, has stated that the slump in deals was worsened by the gap between sellers wanting higher prices and buyers willing to pay. There were many private equity owners that chose to hold onto assets longer instead of exiting with what they see as a depressed price.
Data compiled by Bloomberg found that the global value of mergers and acquisitions as well as related transactions has fallen below US$3 trillion last year for the first time since 2013. As the sharp rise in interest rates made financing deals much more expensive along with raising the possibility of an occurrence of a recession, private equity funds saw a lesser amount of activity.
However, MacNiven asserted that there were several factors that provided opportunities for more deals.
“There are a lot of privately owned assets and private equity assets where the owners would like to sell,” he stated, noting that companies in many industries were in the position to buy and that credit markets were improving as bong yields fell during late 2023.
MacNiven further said that limited partners or pension funds and other investors that served as customers of private equity firms, may be eager to see more money come back.
“After a couple of slower years, the fund life starts to become a focus,” said the senior executive.
Bloomberg’s compiled data also showed that there were only two deals led by private equities that were valued at more than $10 billion involving Canadian firms in the previous year with the largest being Brookfield Infrastructure Corporation’s acquisition of Triton International Ltd, an owner and lessor of intermodal containers.
The other deal was by Canada Pension Plan Investment Board’s joint venture with Silver Lake, a private equity firm focused on technology, in acquiring Qualtrics International Inc., a private software company.
Brookfield Business Partners LP closed the transfer of Westinghouse Electric to Cameo Corporation and Brookfield’s renewable energy arm which was the largest completed sale that involved a private equity firm in Canada last year.
