Global Private Equity's record-breaking performance set to collide with economic turbulence as business cycle nears its end — Bain & Company Mid-year Private Equity (PE) Market Update- Uncertainty around inflation and asset valuations has slowed deal pipelines, and data already shows a drop in exit and fund-raising activity in the first half of the 2022
- Record $3.6 trillion in dry powder leaves PE sector in good stead to weather a downturn and history shows deals done coming out of recession are among the best-performing
Resilience of the PE industry set to maintain its standing as best-performing asset class across market conditions, says Bain & Company's Hugh MacArthur, global PE practice leader
We appear to be nearing the end of the business cycle. While a range of factors could yet still shift the outlook, the global private equity industry is already slowing in the face of inflation and rising recession risks. But the sector is well positioned to weather the storm and emerge even stronger, Bain & Company's latest mid-year analysis of the PE market concludes. "The takeaway here is that PE funds will need to manage proactively to anticipate change and get ahead of it. That will be critical in weathering this period of turbulence and taking full advantage of the recovery to come," said Hugh MacArthur, global Private Equity practice leader at Bain & Company.
He added: "Data shows the industry has relied disproportionately on expanding valuation multiples to support returns over the past two decades, but that won't work in a period of inflation. Top-tier performance moving forward will depend on nuts-and-bolts value creation and a clear understanding of how to manage effectively during a period of rising prices."
