Analysing the PE market

The Private Equity (PE) industry is growing and PE houses have record levels of capital to invest where they see clear opportunities for value creation.

PE deal activity dropped in 2020 overall as the pandemic took hold - the inability to travel for diligence, a lack of available financing and challenges around accurately valuing assets amid the uncertainty all had an impact.

As businesses become used to operating in the new normal, pent-up demand has meant PE deal activity accelerated in the second half of 2020 and the first quarter of 2021 has been at its highest of any quarter in the past decade.  That’s a trend we have certainly seen continuing across the second quarter of the year here in the North West.

The pandemic has driven premium pricing for high-quality assets that were resilient to market uncertainties. That meant that valuations remained high for most deals and 2020 saw leveraged buyout (LBO) valuations exceed 2019 levels in many cases.

At a time when events have resulted in a number of shareholders considering their options, PE houses are having to be proactive and agile to invest in the right opportunities, where they can leverage scale to reduce or eliminate competition, or where they can help companies to grow to the next level. 

As a result, businesses are being asked increasingly challenging questions and are expected to provide efficient, detailed responses. As part of a sale process, management teams that are well prepared have the highest likelihood of a successful outcome at the best value. 

PE teams have deep skills sets and strong relationships that they bring to the fore with portfolio companies and leverage them to accelerate long term value creation to the benefit of all shareholders.  

About EY

EY has a North West focused corporate finance team who are experts in PE transactions.  We are ‘relationship-driven’ with our focus on working with clients to achieve their business and shareholder objectives over the long term.

Our teams also have the benefit of unique access to potential purchasers and their decision-makers across the globe through our integrated network of over 2,000 merger and acquisition professionals with globally established C-suite relationships.

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