5 minute read 1 May 2023
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Private Equity Pulse: takeaways from 1Q 2023

5 minute read 1 May 2023
Related topics Private equity IPO

Take-private deals take center stage amid continued macro volatility.

In brief
  • March saw more than US$62b in PE deals announced following a quiet January and February.
  • Tech-focused deals accounted for 50% of PE’s total activity by value in the first quarter of the year.
  • With less interest from corporate acquirers and general caution from PE buyers, exit activity remains quiet. 

For many reasons, PE is better suited today to manage volatility than it has ever been before. Firms have more capital at their disposal — more than US$1.2t in dry powder — and moreover, have diversified in ways that increase their resilience and flexibility, such as adding new asset classes. Most importantly, the sector as a whole has expanded its operating toolkit by building deep sector and functional expertise.

Macro headwinds continue to be top of mind for PE and make the operating and deployment environment challenging for PE firms, with instability in the banking system providing an additional headwind, insofar as it pulls immediate concerns around risk management to the forefront while pulling focus from longer-term value creation opportunities and opportunistic investments.

Firms are focused on a number of interesting spaces at the moment as they seek to:

  1. Work within the constraints of a more limited financing environment
  2. Deploy capital into companies with compelling long-term growth stories, which in many cases may be temporarily oversold or otherwise mispriced.

A barbell-shaped market dominated by take-private activity

Over the last several quarters, the market has bifurcated, with one side defined by smaller transactions, and the other by take-private deals that have dominated deal activity for transactions of significant size.

The first quarter of 2023 saw PE firms announce deals valued at US$92b, a marked decline from the US$240b announced in the first quarter of last year, but roughly on par with Q4. Activity picked up as the quarter progressed, however, driven by large-scale take privates – March saw more than US$62b in PE deals announced, versus just US$12b in January.

  • Image description

    The above bar chart shows the increase in PE deals across Q1, in US$b. Complete data is below:

    Month Amount
    January 11.6
    February 18.5
    March 61.9

Ten largest deals with PE involvement thus far in 2023



Value (US$m)




Toshiba Corp


Japan Industrial Partners Inc

Take private


Qualtrics International


CPP Investments
Silver Lake

Take private


Univar Solutions Inc


Abu Dhabi Investment Authority Ltd-ADIA
Apollo Asset Management Inc

Take private


Focus Financial Partners Inc


Clayton Dubilier & Rice LLC

Take private


Cvent Holding Corp



Take private


Diversey Holdings Ltd


Bain Capital

Take private


Blackbaud Inc


ClearLake Capital Group LP

Take private


John Wood Group plc


Apollo Asset Management Inc

Take private


Radius Global Infrastructure Inc


Public Sector Pension Investment Board - PSP INVESTMENTS

Take private


Synlab AG


Cinven Ltd

Take private

Source: Dealogic

Because public market valuations adjust (both higher and lower) more quickly than in the private markets, PE firms continue to seek to take advantage of reduced valuations. In a typical year, take-private deals might represent 20% of total PE activity by value. Last year, as stock prices fell, roughly 40% of PE activity was in this category. Thus far in 2023, more than 80% of PE activity by value was deployed in take-private transactions — by far a record, and underscoring the degree to which firms are trying to stay disciplined and looking for opportunities to invest in high-quality assets that they believe are temporarily mispriced.  

PE activity in 2023 has been dominated by take-private deals

  • Image description

    The above bar chart shows the annual percentages of take-private activity from 2011 to 2023. Complete data is below:

    Year Take-privates (% of all PE deals by value) All other deal types    
    2023 81 19    
    2022 37 63    
    2021 25 75    
    2020 13 87    
    2019 29 71    
    2018 20 80    
    2017 21 79    
    2016 15 85    
    2015 19 81    
    2014 11 89    
    2013 28 72    
    2012 11 89    
    2011 18 82    
    2010 24 76    

Tech remains a powerful theme despite a broader sector slowdown

Tech remains a powerful thesis, the result of continued belief in the sector’s long-term secular growth trends coupled with the ability to acquire assets at moderated valuations. The space has garnered nearly a quarter of aggregate PE capital invested in significant transactions (US$100m-plus) over the past five years. The first quarter of this year was no exception — tech-focused deals accounted for 50% of PE’s total activity by value, up from roughly a quarter in the first three months of 2022. 

  • Image description

    The above bar chart shows the sector breakdown of significant deals by value — 1Q22 vs. 1Q2023. Complete data is below:

    Consumer 1Q22 18% 1Q23 10%
    Financials 1Q22 6% 1Q23 7%
    Healthcare 1Q22 6% 1Q23 4%
    Industrials 1Q22 8% 1Q23 3%
    Materials 1Q22 9% 1Q23 7%
    Oil and gas 1Q22 1% 1Q23 5%
    Real Estate 1Q22 17% 1Q23 2%
    Retail 1Q22 0% 1Q23 2%
    Technology 1Q22 27% 1Q23 50%
    Telecom 1Q22 1% 1Q23 3%
    Utilities 1Q22 7% 1Q23 7%

In particular, firms are finding opportunities in software, especially those engaged in developing enterprise platforms deployable for enhancing cybersecurity, artificial intelligence and machine learning (AI/ML), climate-tech, and supply chain analytics. In total, 80% of PE’s deployment so far this year in the tech space has been in the software vertical. We expect such deals to build further momentum and expand into the areas which are a confluence of tech and other core sectors, such as FinTech and Consumer-Tech.

Exit activity remains muted

Exit activity remains muted, the result of limited appetite from corporate acquirers, an IPO window that remains largely closed, and continued general caution among potential PE buyers. PE firms announced exits valued at US$54.5b in the first quarter of the year, down 77% from the same period a year ago, and down 53% from Q4 of last year. 

  • Image description

    The above bar chart shows the levels of exit activity since the pandemic. Complete data is below:

    Date Sales to strategics Sales to PE IPOs  
    2021 Q1 $138.6 $72.4 $50.0  
    2021 Q2 $200.9 $77.3 $44.4  
    2021 Q3 $118.8 $73.5 $25.8  
    2021 Q4 $123.8 $94.2 $18.4  
    2022 Q1 $53.6 $55.2 $2.9  
    2022 Q2 $243.2 $47.0 $1.3  
    2022 Q3 $60.8 $26.4 $2.1  
    2022 Q4 $90.5 $22.3 $2.2  
    2023 Q1 $36.2 $16.5 $1.8  

Declines in the IPO route remain particularly acute amid a broader slowdown in the IPO markets - just four PE-backed deals have priced thus far this year, down from nearly 300 for the full year 2021. Nonetheless, firms remain ready for when the window reopens. Currently, there are 29 PE-backed deals in active registration across a range of industries, including technology, industrials and consumer products.

  • Image description

    The above bar chart shows an aggregate of IPO activity in 1Q 2023. Complete data is below:

    Number of PE-backed IPOs in 2021 287
    Number of PE-backed IPOs in Q1 2023 4
    Number of PE-backed IPOs currently in registration 29

In aggregate, exits via trade sales have represented two-thirds of PE exits thus far this year, down slightly from the 74% they represented last year; exits to other PE sponsors represented 30% of exits, up from just 19% last year; while exits via IPO have represented just 3% of exits by value to date in 2023. 

Outlook – volatility will be a catalyst for continued growth in key themes

Market reversals and periods of excess volatility have a strong tendency to catalyze developing trends and new market innovations. It’s likely that today’s market conditions will provide marked tailwinds to a number of themes already underway in the space:

  1. The particulars of today’s operating environment have yielded a major catalyst for private credit funds. As PE’s traditional lending sources stepped away from the market in the second half of last year, private credit has stepped in as a major source of alternative funding for a much larger swath of PE deals. Recent banking instability seems likely to exacerbate the trend. Credit funds continue to work together on larger deals and will ultimately take some measure of share from the broadly syndicated loan market, even after those markets normalize. According to S&P Leveraged Commentary and Data, of the 73 PE deals tracked in Q1 by LCD, just four were financed by the syndicated markets.
  2. Constraints in PE’s traditional exit routes brings alternative modalities to the forefront. The last several years have seen explosive growth in the market for PE secondaries. Despite the growth, however, it remains just a fraction of the size of the overall market for primaries. This is in sharp contrast to markets for other financial products, where secondary trading is magnitudes larger than the primary market.
  3. Lastly, as fundraising becomes more challenging for PE’s core institutional market - funds raised by PE shops fell 14% in Q1 versus the prior quarter — larger firms in particular will continue to pursue investors that are new to the asset class. Already, firms that have invested in these capabilities have seen a measure of resilience in their fundraising relative to the broader market through new platforms and product launches. In the coming years, blockchain and the tokenization of assets will be powerful enablers that allow PE to unlock a much broader population of investors than ever before.

These periods, despite their obvious challenges, provide tremendous opportunities for PE firms to acquire high quality assets at compelling prices. According to Cobalt benchmarks, deals executed in 2007 were acquired at median entry multiples of 8.6x EBITDA and returned 12.6%; deals inked two years later saw multiples drop to 6.5x and returned just over 30%. While few are anticipating disruption of that magnitude or duration, it’s clear that many of PE’s best deals are made amid more challenging macro backdrops. 


The quarterly PE Pulse provides data and insights on private equity market activity and trends.

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Related topics Private equity IPO