Global private equity (PE) mergers and acquisitions (M&A) activity is showing signs of revival, pacing 12% ahead of estimates for the first half of 2024, according to a report by Alvarez & Marsal, citing Pitchbook data. However, the number of deals, at 4,210 worth $325.2 billion, still lags behind the first half of 2023 by 8% in volume and 17% in aggregate value. Persistent challenges, including high interest rates, inflation, and post-pandemic supply chain disruptions, continue to weigh on dealmaking, particularly for large-scale transactions. Megafunds with over $5 billion in assets under management (AUM) have faced declining returns, while mid-market funds, with $100 million to $5 billion in AUM, remain more resilient due to their focus on smaller, more feasible deals.
Prolonged exit timelines are compounding pressures on PE funds, with median asset hold periods reaching 7.1 years in 2023 due to valuation mismatches between buyers and sellers. To navigate these challenges, 50% of surveyed PE professionals are focusing on creating value within existing portfolios, often through operational transformations and technology-driven enhancements. According to A&M, 84% of respondents are likely to expand these efforts. This shift toward value creation, starting in pre-deal stages, reflects the evolving strategies in a constrained M&A landscape.
