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May 31, 2024
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Bump
it's going to be pretty bad for years
Bump.
My firm says pick up in 2H2023 based on what sponsors are saying. really just hanging our hat on the fact the pe groups just had record fund raises and with velocity of deals slowing down, they’re not putting money to work fast enough. They really need to start deploying capital otherwise LPs will start to get pissed. Where is this proprietary access to quality deals?
Probably a bumpy road till then. Some sectors like HC will probably do well.
It has less to do with access / availability of companies up for sale but more with (i) cost of debt (obviously) and (ii) price expectations not reflecting this new cost of debt. Until the market accepts valuations need to come down (and thus marking down your own book in a bunch of cases) limited business will be done. Part of the solution is in the hands of the banks as they need to open up their balance sheets / underwriting to ease the pain with cheaper debt than the direct lending guys. So it's a bit of a game of chicken to see who is going to take how much of the pain and risk, and so far no one has folded yet -- will it be sponsors who need to deploy or bankers who need a fee, probably a bit of both
Interestingly, this is already happening in biotech. Major change since a year ago. Valuations dropped end of 2021, but it’s really taken until late 2022 for board expectations to re-align with the markets.
Bump
Bump - curious on people’s current thoughts following the latest banking fiasco
Obviously market is shitty right now, but curious if the current rate hike expectations and terminal rate expectations both severely decreasing (25bps next hike and then pause + several cuts this year) after this past week of banking fiasco ends up being good for M&A later in 2023 or into 2024?
Bump
Bump - how's everyone looking going into 2024?
I’m not optimistic
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