Dechert, in partnership with Mergermarket, released their 6th annual Global Private Equity Outlook report. This latest edition of the report provides a comprehensive analysis of the private equity (PE) market, offering insights into the challenges and opportunities that lie ahead in 2024.

The report reveals that despite a challenging year marked by rising interest rates and slower growth, successful private equity firms are adapting to the changing environment. Based on responses from senior executives within PE firms in North America, EMEA, and APAC, the key findings include:

• 94% are likely to pursue take-private transactions, a significant shift from 2022 when only 13% of GPs expressed firm intentions of pursuing take-privates.
• 59% intend to make a GP-stake divestiture over the next 24 months, with growth as the primary motivational factor.
• 50% view GP-led secondaries and continuation funds as growing trends related to the current economic environment.
• 78% already make use of private credit for acquisition financing at the portfolio level, a trend exacerbated by the U.S. regional bank crisis in early 2023.
• 71% expect rising regulatory scrutiny to negatively impact dealmaking plans over the next 12 months.
• 21% say their biggest challenge in replenishing dry powder is competing against the largest and most diversified GPs. This continued bifurcation of the fundraising market is likely to increase with the shift towards the retailization of alternative investments.

"Despite a decline in fundraising and dealmaking coupled with debt becoming costlier and scarcer, private equity marches forward. The shift towards take-private transactions is an example of how they are not just surviving but thriving in the face of market volatility, finding value in public markets where others see uncertainty," said Dr. Markus P. Bolsinger, co-head of Dechert's global private equity practice. "Given the additional regulatory complexity and public scrutiny of these deals, active engagement of skilled professional advisers from the very start is a necessity, particularly in the U.S., where stockholder-plaintiffs have recently secured significant damages awards in the Delaware courts against acquirors in take-privates."

As we move into 2024, the trends highlighted in the report emphasize the industry's commitment to finding innovative solutions to sustain investment cycles and provide liquidity to investors, even in the face of challenges. The private equity market continues to evolve, demonstrating its resilience and capacity to thrive in an ever-changing landscape.

The 2024 Global Private Equity Outlook report is available for download here.