U.S. Private Equity Market Recap - November 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 October

• Deal activity: The final quarter of 2024 did not get off to a strong start in October, but dealmakers remain optimistic that the dealmaking environment will continue to improve and transaction activity will pick up.
• Pressure to exit: PE firms should prioritize the need for exits heading into 2025, as the percentage of buyout-backed companies they have held for more than 5 years is growing, and distributions remain low.
• Election implications: Dealmakers are hoping that a less stringent regulatory environment will spur deal activity, but uncertainty remains over how President-elect Trump’s second term will affect deal activity and certain industries.

U.S. PE Deal Activity

• Deal activity: While deal count had a slow start in Q4 and fell 1% MoM in October, dealmakers remain optimistic about a pickup in transactions with the election behind us and a contiued decline in rates. 
• Deal value: Deal value dropped for the second consecutive month in October but remains up 14% YTD in 2024, compared to the same period last year. 2024 is on track to have more $1bn+ deals than 2023.

PE Dry Powder & Fundraising Trends

• Fundraising: The fundraising environment remains difficult, and 2024 is on track to have the fewest number of closed funds since 2016.
• Deploying dry powder: PE firms continue to deploy the large sums of amassed dry powder, and dry powder in buyout funds has dropped by 12% since December 2023.

PE Holding Period & Distributions 

• Prolonged holding period: Currently, over 30% of buyout-backed companies have been held for 5+ years.
• Low distribution yields: Distribution yields remain near GFC-level lows, but alternatives such as continuation funds and dividend recaps are helping to provide some liquidity.
• Pressure to exit: PE firms continue to face pressures to exit and return investor capital.

Q3 Earnings Commentary

• Deal activity optimism: Executives from public PE firms shared that they expect transaction activity will continue to pick up in coming months.

“In Q3, for the second consecutive quarter, we invested or committed over $50 billion, the highest in more than 2 years…I was talking with the private equity guys the last day or so, and the number of nondisclosure agreements, confidentiality agreements, is up 2.5-fold in September versus where it was a year ago. Now that doesn't necessarily mean it's going to turn into that volume of deals, but it clearly shows you there is more enthusiasm. And we know in the private equity world, there's a lot of companies that need to be sold, similar story in real estate. So it feels like there's a lot of pent-up demand for realizations for DPI, and I think we'll see that in 2025.”

– Jon Gray, President and COO (October 17, 2024)

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“Being past the election has removed market uncertainty, first and foremost. Markets like certainty, and you're seeing that broadly across capital markets, particularly in the stock market yesterday. Over the medium to long term, this should be a further catalyst for IPOs, M&A and key sectors we invest in. This should be an environment in which we are well positioned to capitalize on monetization opportunities and put capital to work …Prior to election, we had already seen the U.S. Federal Reserve's shift in stance on interest rates, and that was a clear sign that we entered a new era of monetary policy and that inflation has stabilized. The election certainty and the change in monetary policy are a powerful combination supporting economic growth and our business.

– Harvey Schwartz, CEO (November 7, 2024)

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“Inflation has eased and central banks have begun to lower rates. Liquidity has returned to the market as the direction of travel on rates is now clear. This shift has generated greater confidence among market participants, and this normalization is unlocking value across our business. This has allowed transaction activity to pick up, leading to both the buyers and the seller's market. We see attractive investment opportunities, especially for large transactions or opportunities that need capital to grow…In general, across the industry, we anticipate a significant return of capital to limited partners, and this recycling of capital will add further support to an increasingly constructive fundraising environment.

– Bruce Flatt, Brookfield (November 4, 2024)

U.S. High Yield Issuance

• High yield issuance up: YTD 2024 through October, high yield issuance is up 80% compared to the same period last year.
• Issuance breakdown: 74% of the high yield issuances in 2024 YTD have been for refinancings.

U.S. Leveraged Loan Issuance

• High issuance levels: Monthly issuance levels rose to $130 billion in October, up 60% from September; YTD issuance is at $1.26 trillion, nearly double the amount issued during the same period last year.

A Look Ahead

• Election impact: Wall Street has had a favorable reaction to President-elect Trump’s election win, with public equity markets trading up following the election and dealmakers expressing optimism.
  • Regulatory environment and M&A: Dealmakers are hoping that the incoming administration will bring a more lax regulatory and anti-trust environment and, in turn, boost M&A activity.
  • Industry dynamics: Industries in regulatory crosshairs, such as energy, tech, life sciences and others, may experience a shift in dynamics around deal activity levels and capital flow.
  • Policy uncertainty: Investors can look back to President-elect Trump’s first presidency for a playbook, but uncertainty remains over how antitrust, tariff and foreign investment policies will play out and affect the private capital industry.
• Rate cuts continue: The Fed cut interest rates for a second time this year at its November meeting and remains on track to continue cuts in the coming months.
• Individual Investors in PE: Private equity firms are looking to attract capital from high-net-worth individuals as an untapped pool for future growth. 
  • Firm initiatives: Some firms are rolling out investment funds aimed at high-net-worth individuals and others are adding private banking veterans internally to attract affluent clients. 
  • Differing perspectives: Some investment advisers are excited about the PE investment opportunity for their clients, citing benefits from private-market exposure and diversification, while others are less sure due to high fees and liquidity concerns.