What to Expect for Private Equity in 2023: Bloomberg TV Recap
As Seen in: Bloomberg
On December 23, 2022, Accordion’s CEO & Founder Nick Leopard appeared on Bloomberg TV to discuss his expectations for private equity in 2023.
On PE Activity
After a record fundraising year in 2021 and ‘slow but steady’ inflows in 2022, the PE industry is full of committed dry powder that will need to be invested. That money will likely be put to work in the second half of 2023.
“Deal count in  was actually only down 16 percent when fundraising was down more than 50 percent. You’ve got to put this money to work in a finite period of time. Private equity funds are continuing to find very creative ways to do so.”
That means a likely increase in take privates, carve-outs, and add-on acquisitions.
On Turnaround & Restructuring
Accordion has seen PE funds lean in and put dollars behind restructuring their portfolio companies — including those that thrived during COVID but are now struggling to support top-line growth.
“It’s a different market from anything we’ve seen in the past… We’re doing a lot of turnaround & restructuring business with companies that are finding themselves with a bunch of floating-rate debt right now and companies that have just been mismanaged. There’s a lot of operational turnaround work happening.”
We’re going to see an emphasis on patient capital. PE funds will be patient with their spending and invest their time in the overall improvement of their portfolio companies.
“Multiple expansion was the single biggest driver of private equity over the last 20 years. So if you can’t rely on multiple expansion, you really need to focus on driving the bottom line performance.”
On Private Credit
The volume of private credit transactions slowed in 2022 (versus 2021, which was a record year for many direct lenders). However, the overwhelming majority of PE-style deals late in 2022 tapped the private market for deal financing.
“The real issue is that the syndicated market banks are sitting on a bunch of loans. The syndicated market is very slow right now, but there are a bunch of private credit funds who are now in the driver’s seat.”
On New Playbooks
When it comes to what PE funds are avoiding this year, the answer is the old playbooks.
“The private equity executives I speak with are no longer relying on the old playbooks. They’re much more focused on cash flow management, portfolio operations, and overall operational improvements.”