The private equity market saw a shift in deal-making in 2024, with buyers securing favorable terms and pricing despite lower deal volume compared to the 2021 boom. The median price-to-earnings (P/E) multiple for global PE buyouts dropped to 11.1x, the lowest level since 2016. This decrease highlights a growing trend where PE firms are focusing on larger buyouts at more attractive valuations, allowing them to target higher-value assets. In 2024, the median buyout size reached a record $100 million, signaling that PE buyers are continuing to spend substantial amounts but with more favorable terms. This shift offers firms an opportunity to acquire divisions of troubled publicly held companies or larger enterprises at more competitive prices. Additionally, add-ons, where PE firms acquire smaller companies to merge with portfolio companies, reached a robust median acquisition price of about $40 million, further underlining the market’s appetite for strategic growth.
Despite these changes, the PE deal market remains healthy. While the number of deals has decreased since 2021, total deal values still average between $320 billion and $350 billion per quarter, which remains well above pre-2021 levels. Sellers, however, are seeing a small rebound in exit sizes, with average exits climbing to nearly $780 million, indicating some resilience in the market. For CFOs, the current PE environment presents opportunities to strategically leverage financial capabilities. The shift in pricing and deal sizes opens doors for targeted acquisitions and portfolio growth while maintaining a disciplined approach to valuation and financial oversight.
