U.S. Private Equity Market Recap - October 2024

Read our latest insights into the U.S. private equity market. We cover monthly deal activity and size, fundraising, exits, leveraged loans, and a look ahead. To receive our private equity thought leadership, please join our mailing list.

Key Takeaways from September

• Deal activity: Q3 deal count finished flat compared to Q2, and 2024 deal count is on track to finish around 2023 levels. Deal value continues to trend upwards, finishing up 24% QoQ and on track to finish the year up 16%. 
  
• Exit activity: PE exit activity increased in Q3, and Q3 had the highest quarterly number of exits in two years. The number of exits in 2024 YTD already equals FY 2023 levels. 
  
• IPO activity: U.S. IPO activity has already exceeded FY 2023 levels and the market for sponsor-backed IPOs is picking up.

U.S. PE Deal Activity

• Deal Activity: Deal activity fell in September, with deal count dropping 14% to the lowest monthly level in four years. Q3 2024 finished with deal count flat and deal value up 24% compared to Q2 2024. 
• Annualized Activity Levels: 2024 deal activity is on track to finish the year with deal count similar to 2023 levels and deal value up 16% YoY.

Top U.S. PE Deals by Deal Size

• PE Deal Size Over Time: U.S. PE deal size has been trending up over the last five years; deals $1bn+ are making up an increasing proportion.
• $1bn+ Deals: There were 41 $1bn+ deals in Q3 2023, the highest in a quarter since Q1 2022. The number of $1bn+ deals YTD is up 8% compared to 2023 YTD.

Fundraising Trends & Funds Raised

• Fundraising: Q3 saw a drop in fundraising activity compared to Q2. 2024 fundraising is on track to finish below 2023 levels for both fund count and capital raised.
• Q3 Fund Stats: New Mountain Capital closed the largest fund of the quarter at $15.4bn. Eighteen funds of $1bn+ and 28 funds of $500m+ closed in Q3 2024.

PE Deal Multiples & Exit Activity

• Exit Activity: The number of sponsor exits in Q3 2024 hit its highest level in two years. YTD exits have already reached FY 2023 levels as PE firms continue to prioritize returning capital to investors. 
• Valuation Metrics: U.S. PE EV / EBITDA multiples have increased in 2024 to over 15x after falling two turns in 2023. The rise in EBITDA multiples may by explained by sellers bringing their more attractive assets to the market in the current dealmaking environment.

IPO Activity

• U.S. IPO Market: YTD U.S. IPO activity has already topped FY 2023 levels but remains below normalized levels.
• Sponsor-backed IPOs: While the proportion of PE-related IPOs remains low at 6%, the market for sponsor-backed IPOs is picking up and there is a positive outlook for IPO exits in 2025. 

PE Deal Activity by Industry 

• Active Industries: Industrial and tech have seen the most deal activity in 2024 YTD on a deal count basis. Tech has been the most active sector on a deal value basis.
• Shifts in Active Sectors: YTD deal activity has seen a shift away from consumer and healthcare deals, with deal count and value in healthcare down 31% and 37%, respectively, and deal count and value in consumer down 8% and 18%, respectively.  

A Look Ahead

• Long-Anticipated Rate Cut Arrives: The Federal Reserve cut rates by 50 bps at its September meeting.
  
  • Fed Chair Jerome Powell indicated that if macroeconomic data remains consistent, there will likely be two more quarter point rate cuts this year. 
  • The September rate cut was a positive development for M&A markets and dealmakers hope further rate cuts will continue to spur deal activity as the cost of capital comes down.
• U.S. Election Lingers: Markets face political uncertainty as the U.S. presidential election approaches in the coming weeks. 
  
  • Unlike the IPO market, M&A dealmaking has not historically shut down in the weeks preceding or following the election.
  • However, prior election years have seen a spike in closed M&A deals in December, likely resulting from postponed deals. 
• IPO Market Warms: The IPO market for sponsor-backed companies is picking up and the outlook for IPO exits in 2025 is improving.
  
  • Successful recent IPOs are sending a positive signal to companies and investors currently on the sidelines.
  • While the IPO market is outpacing last year, it remains in a stage of recovery as activity is below normalized levels.
• Japan Attracts Attention: Large PE firms, including KKR and Blackstone, have identified Japan as a country with compelling investment opportunities. 
  
  • Inbound Japan M&A is up this year and Japan is expected to drive deal activity in the APAC region.