Private equity deal values doubled at the end of 2021, reaching $1.1 trillion (£892 billion).
But what has been driving the boom? And what are the most lucrative opportunities?
- Covid rebound: UK dealmakers are making up for lost time, after a Covid induced slowdown. With significant hits felt in travel and hospitality during the pandemic, private equity specialists are maximising the recovery across multiple sectors.
- Shrugging off Brexit concerns: Even though Brexit induced changes to regulation and legislation initially worried investors, dealmaking opportunities are rife as European corporates remain attractive. In fact acquisitions of European corporates by UK private equity firms has jumped up by 80%.
- Tech remains king: Software and technology companies are high in demand, with investors keen to unleash the potential investment can bring. Which explains why one in three deals last year involved a technology company. This market boomed during the pandemic, as technology became even more integral to business and personal life, and the surge in investment shows no signs of abating.
- Ethical focus: With the pandemic highlighting widening inequalities, and environmental reports depicting future doomsday scenarios, it’s no wonder that nearly three quarters of investors (70%) have made ESG a part of their investment policies. The majority, 93%, said they would walk away from an investment opportunity if it posed an ESG concern. Investors are looking for organisations that can bolster their ESG portfolio, understanding both the financial and non-financial benefits it can have in the future.
Pent up demand, high levels of dry powder and robust markets are driving the current boom in private equity deals. But with the ongoing conflict in Ukraine and soaring inflation levels, activity in 2022 year may not surpass last year’s record-breaking figures. However, it’s clear that investment opportunities are still in abundance.
Consultancies are keen to get in on the action, helping private equity firms and investors to source lucrative deals. Advising on everything from growth opportunities and areas of risk to preparations required for IPO and M&A activity. Against a tumultuous global and economic backdrop, investors have to be rigorous with their portfolios. But with a wealth of deals still to be made, private equity opportunities remain plentiful.