Breaking Private Equity News USA

Private Equity News USA - Summary

The US private equity market is the largest in the world, with over $6 trillion in assets under management as of 2023. The market is composed of institutional investors, such as pension funds, and large private equity firms funded by accredited investors.

Private equity firms invest in a variety of asset classes, including:

• Leveraging buyouts (LBOs): In an LBO, a private equity firm acquires a company using a combination of debt and equity. The debt is typically financed by banks and other lenders, while the equity is provided by the private equity firm and its investors.

• Venture capital (VC): VC firms invest in early-stage companies with high growth potential. The goal of VC firms is to help these companies grow and become successful so that they can be sold or taken public at a profit.

• Growth equity: Growth equity firms invest in later-stage companies that are already profitable but have the potential for further growth. The goal of growth equity firms is to help these companies expand their operations and reach new markets.

• Distressed debt: Distressed debt firms invest in companies that are in financial trouble. The goal of distressed debt firms is to restructure these companies' debt and help them become profitable again.

The US private equity market has grown rapidly in recent years. This growth has been driven by a number of factors, including:

• Low interest rates: Low interest rates have made it cheaper for private equity firms to borrow money, which has increased their investment capacity.

• Ample liquidity: There is a lot of money available to invest in private equity, from both institutional investors and high-net-worth individuals.

• Strong performance: Private equity firms have generated strong returns for their investors in recent years, which has attracted even more capital to the market.

The US private equity market is expected to continue to grow in the coming years. This growth will be driven by a number of factors, including:

• The aging population: The aging population is expected to create demand for private equity investments in healthcare, senior living, and other sectors.

• The rise of technology: The rise of technology is expected to create new opportunities for private equity investment in areas such as artificial intelligence, cybersecurity, and healthcare technology.

• Globalization: Globalization is expected to create new opportunities for private equity investment in emerging markets.

The US private equity market is a complex and dynamic market. It offers investors the potential for high returns, but it also carries significant risks. Investors should carefully consider their investment objectives and risk tolerance before investing in private equity.

Latest Private Equity News in USA: Key Developments and Trends

Private equity is a rapidly growing industry in the USA. It is an alternative investment class that involves investing in private companies and taking them private. Private equity firms raise funds from institutional investors and wealthy individuals to invest in these companies. The goal is to improve their operations, increase their value, and eventually sell them for a profit.

Recent news in the private equity industry has been dominated by regulatory changes. The US Securities and Exchange Commission (SEC) has adopted new rules that will require private equity and hedge funds to disclose more information about their fees and expenses. This is a significant move that will increase transparency and accountability in the industry. Additionally, the SEC has imposed tougher disclosure rules on private funds, which will help to protect investors and ensure that they have access to more information about the funds they are investing in.

Key Takeaways

• Private equity in the USA is growing rapidly, with firms raising funds from institutional investors and wealthy individuals to invest in private companies.

• Recent news in the industry has been dominated by regulatory changes, including new rules from the SEC that will increase transparency and accountability in the industry.

• These changes are designed to protect investors and ensure that they have access to more information about the funds they are investing in.

Private Equity in the USA

Private equity in the USA has been gaining momentum in recent years. According to a report by PitchBook, private equity firms in the US raised a total of $597 billion in 2022, which is a 20% increase from the previous year. The report also showed that the number of deals fell only 5% year-on-year, but deal sizes were bigger, indicating a shift towards larger deals.

Private equity firms in the US have been investing in a variety of industries, including technology, healthcare, and energy. In the first half of 2023, private equity deal-making activity in the US remained strong, with investors taking a growing role in US capital markets. Tech take-private buyouts in Q1 were financed with less debt than in recent history, according to PitchBook's Q1 2023 US PE Breakdown report.

The US Securities and Exchange Commission (SEC) has been keeping a close eye on the private equity industry. In August 2023, the SEC adopted new rules that will shine a light on private equity and hedge fund expenses and fees, in an effort to provide better transparency to investors. However, the SEC watered down the new private equity rules, which were set to be the most significant piece of new private equity regulation in decades, with the SEC playing catch-up to an asset class that now manages trillions of dollars, according to Axios.

Private equity firms in the US are facing increasing competition from other sources of capital, such as private credit funds. However, the industry has remained resilient in large part due to the availability of debt from these funds. Private equity firms are also exploring new ways to generate returns, such as through impact investing and ESG (environmental, social, and governance) investing.

Overall, private equity in the USA continues to be a dynamic and evolving industry, with both challenges and opportunities. Private equity firms are adapting to changing market conditions and regulatory environments, while continuing to seek out attractive investment opportunities across a range of industries.

Recent Deals and Transactions

Private equity firms have been making headlines with their recent deals and transactions in the USA. In the first half of 2022, private equity firms spent a record $226.5 billion on take-privates, acquisitions, and other transactions around the world, up 39% from the same time period last year.

Private Equity News USA

One notable deal was the acquisition of Standish Management by buyout firm THL for $1.6 billion in July 2023. Standish Management is a leading provider of investment management and administrative services to institutional investors. THL's latest flagship private equity fund raised $5.6 billion from investors in 2021, and the acquisition of Standish Management is expected to strengthen the firm's position in the asset management industry.

Another major deal was Carlyle Group's plan to raise as much as $27 billion for its latest flagship fund, which would be the largest-ever private equity pool. Carlyle Group has been smashing records with multi-billion M&A deals, and the firm's latest fundraise reflects the strong demand for private equity investments.

Private equity firms have also been active in the private fund industry, with the US SEC adopting new rules in August 2023 that will shine a light on private equity and hedge fund expenses and fees. The new rules will require private equity firms to disclose more information about their fees and expenses, which could increase transparency and accountability in the industry.

Overall, private equity firms are expected to continue making deals and transactions in the USA, as they seek to capitalize on the strong demand for alternative investments and the robust M&A market. While some critics have raised concerns about the impact of private equity on companies and the economy, others argue that private equity can provide valuable capital and expertise to help companies grow and succeed.

Sector Spotlight

Private equity firms are always on the lookout for sectors that offer high growth potential and attractive returns. In recent times, technology and software have been the most popular sectors for private equity investment in the US. This trend is expected to continue as the world becomes increasingly digitized, and businesses rely more on technology to drive growth.

Real estate is another sector that has seen significant private equity investment in recent years. Private equity firms have been investing in a variety of real estate assets, including office buildings, apartments, and shopping centers. With interest rates remaining low, private equity firms are likely to continue investing in real estate assets in the near future.

Energy and healthcare are two other sectors that have seen significant investment from private equity firms. With the world's growing population, the demand for energy and healthcare services is expected to continue to rise. Private equity firms are well-positioned to capitalize on this trend by investing in companies that provide energy and healthcare services.

Private Equity News USA

Food is another sector that has seen increased private equity investment in recent years. With consumers becoming more health-conscious, private equity firms are investing in companies that offer healthy food options. Private equity firms are also investing in companies that offer innovative food products and services.

Finally, media partnerships have become increasingly popular in the private equity world. Private equity firms are partnering with media companies to create new content and reach new audiences. These partnerships are expected to continue to grow as media companies look for new ways to monetize their content.

Overall, private equity firms are always on the lookout for sectors that offer high growth potential and attractive returns. While technology and software remain the most popular sectors for private equity investment, real estate, energy, healthcare, food, and media partnerships are also attractive investment opportunities.

Fundraising and Investment

Private equity fundraising in the US has remained relatively stable despite volatile global markets. According to PitchBook, private equity firms closed $176 billion in fundraising through H1 2022, making it an outlier in the industry.

However, in 2022, fundraising fell by more than $100 billion as LPs struggled with the overweighting of private equity within their portfolios, according to Private Equity International. A total of 1,520 funds closed in 2022, which raised $727.3 billion between them.

The US Securities and Exchange Commission (SEC) adopted new rules in August 2023 that will shine a light on private equity and hedge fund expenses and fees. The new rules will overhaul the $20 trillion private fund industry and require funds to disclose more information about their fees and expenses to investors.

This move is expected to increase transparency and help investors make more informed decisions.

Co-investment has become increasingly popular among investors in recent years. In 2022, co-investment deals accounted for 23% of all private equity deals, according to PitchBook. This trend is expected to continue as investors seek to reduce fees and increase returns.

Mega-funds, which are funds with over $5 billion in assets under management, have also become more prevalent in recent years. In 2022, 43 mega-funds closed, raising a total of $262 billion, according to PitchBook. This trend is expected to continue as investors seek to invest larger amounts of capital in fewer funds.

Private Equity News USA

Venture capital (VC) fundraising has also remained strong in the US. In H1 2022, VC firms raised $71.9 billion, according to PitchBook. This is a record high and is expected to continue as investors seek to invest in high-growth companies.

Overall, private equity fundraising and investment in the US has remained strong despite global market volatility. While fundraising fell in 2022, co-investment and mega-funds have become more popular among investors. The SEC's new rules are expected to increase transparency and help investors make more informed decisions.

Deal Value and Size Analysis

Private equity dealmaking in the USA has been breaking records in terms of both deal value and size in recent years. According to a PitchBook report, US PE dealmaking topped $1 trillion in 2021, a new record for the industry. This momentum continued in 2022, with firms still managing to do over $1 trillion in deal value, despite headwinds that hit the industry.

The Q1 2023 US PE Breakdown report, sponsored by Stout, G-P, and Barings, offers insight into what went right for private equity in Q1 2023 while VC was paralyzed and public equities and fixed-income markets floundered. The report highlights that tech take-private buyouts in Q1 were financed with less debt than in recent history.

In terms of deal size, the PitchBook report also notes that the average deal size in the US private equity market has been steadily increasing over the past few years. In 2021, the average deal size was $1.1 billion, up from $802 million in 2019. This trend is expected to continue, with larger deals becoming more common in the industry.

Despite the impressive deal value and size figures, it is worth noting that the private equity industry is not without its challenges. Higher interest rates, ongoing macroeconomic turbulence, challenging debt markets, and global geopolitical uncertainty are all factors that can impact dealmaking in the industry.

Overall, the private equity industry in the USA continues to see strong deal value and size figures, with larger deals becoming more common. While challenges remain, the industry is expected to remain a key player in the US economy for the foreseeable future.

Private Equity Firms Performance

Private equity firms have been performing well in the US market, with several firms reporting strong financial results. Blackstone, one of the largest private equity firms in the world, reported a record $5.3 billion in profits for Q2 2023, driven by strong performance in its real estate and private equity divisions. The company's assets under management (AUM) also hit a record high of $938 billion, up 22% from the previous year.

Golub Capital, a leading provider of credit to middle-market companies, reported record quarterly earnings of $82 million in Q2 2023. The firm's AUM also hit a record high of $35.3 billion, up 23% from the previous year. Golub Capital's strong performance was driven by its ability to provide flexible financing solutions to middle-market companies, which have been in high demand due to the current economic climate.

Vista Equity Partners, a private equity firm focused on software and technology investments, reported strong financial results for Q2 2023. The firm's AUM hit a record high of $77 billion, up 28% from the previous year. Vista's strong performance was driven by its ability to identify and invest in high-growth software and technology companies, which have benefited from the shift to remote work and increased demand for digital solutions.

Overall, private equity firms have been able to adapt to the current economic climate and continue to generate strong returns for their investors. The availability of debt from private credit funds has also helped to support dealmaking activity, despite a tough lending environment.

Exit Strategies and Returns

Private equity's exit activity in the US has been volatile in recent years. According to a PitchBook report, the exit value totaled $87.3 billion in Q2 2023, a 67% jump from the previous quarter and the first sequential quarterly rise in value in 12 months. This growth in exit value is a positive sign for the industry and sets up the chance for a rebound.

In 2022, private equity exits plummeted, with the largest exit of the year being the $20.77 billion take-private deal for cybersecurity business McAfee Corp. This decline in exits was due in part to a significant slowdown in IPOs following market corrections in early 2022, according to Moonfare.

Private equity firms are refining their exit strategies to achieve stronger valuations. The EY 2021 Global Private Equity Divestment Study found that half of private equity executives surveyed are planning exits to public markets through initial public offerings (IPOs) or special purpose acquisition companies (SPACs) in the next 18 to 24 months. This indicates a shift towards exits through public markets, which can potentially provide higher returns.

To maximize investor returns at exit, it is essential to begin with an IPO exit readiness strategy. EY has been the global IPO leader for the last 10 years, and EY transaction teams work with 60% of the global PEI 300 and 18 of the 20 largest PE funds in North America, according to EY.

In conclusion, private equity exit strategies and returns are critical to the success of the industry. With the recent rebound in exit value and a shift towards exits through public markets, private equity firms can potentially achieve higher returns for their investors.

Regulation and Disclosure

The private equity industry in the USA has seen a significant amount of regulatory changes in recent years. The Securities and Exchange Commission (SEC), the primary US regulator of private funds, has been actively working to enhance the regulation of private fund advisers and update the existing compliance rule that applies to all investment advisers.

As of August 23, 2023, the SEC has adopted new rules and rule amendments to enhance the regulation of private fund advisers. These rules include overhauling private fund disclosure requirements, banning certain fees, and requiring private equity, venture capital, and hedge funds to provide investors with detailed quarterly reports on performance and other information.

Private fund advisers are now required to disclose more information about their funds, including information about their investments, risks, and performance. The SEC has also banned certain fees, such as accelerated monitoring fees, which are charged to portfolio companies in connection with their sale or IPO.

The SEC's new rules also require private fund advisers to adopt and implement written compliance policies and procedures. These policies and procedures must be designed to prevent violations of the Advisers Act and must be reviewed at least annually.

Private fund advisers must also appoint a chief compliance officer (CCO) to administer the policies and procedures. The CCO must be knowledgeable about the Advisers Act and the private fund industry and must have the authority to enforce the policies and procedures.

Overall, the SEC's new rules are designed to enhance the transparency and accountability of private fund advisers and provide investors with more information about the funds they invest in. These rules will help to ensure that private equity, venture capital, and hedge funds are operating in compliance with the law and are acting in the best interests of their investors.

Private Equity Fees

The US Securities and Exchange Commission (SEC) recently adopted new rules that will overhaul the private fund industry by shining a light on private equity and hedge fund expenses and fees. The rules aim to protect private fund investors by increasing transparency and disclosure requirements, banning certain fees, and enhancing the regulation of private fund advisers.

Private equity fees are a critical component of the industry, and investors need to be aware of the various fees charged by private equity firms. Private equity firms typically charge two types of fees: management fees and performance fees. Management fees are charged annually as a percentage of the fund's total committed capital, while performance fees, also known as carried interest, are a percentage of the fund's profits.

The new SEC rules will require private equity firms to disclose more information about their fees and expenses, including the fees charged by portfolio companies. The rules also prohibit certain types of fees, such as transaction fees, which are charged when a portfolio company is bought or sold.

Private equity firms will also be required to disclose more information about their use of leverage, including the terms of any loans or other types of borrowing used to finance investments. The SEC's new rules will also require private equity firms to provide more information about their valuation practices and how they calculate the value of their portfolio companies.

Overall, the SEC's new rules will provide investors with greater transparency and protection, while also improving the regulation of private fund advisers. Private equity firms will need to adapt to the new rules and ensure that they are complying with all of the new requirements.

Private Equity Debt and Lending

Private equity firms have been active in the lending market, providing loans to companies that are unable to secure traditional bank financing. In recent years, the private credit market has continued to grow, with direct lending funds raising billions of dollars from investors.

According to Bloomberg, the $1.5 trillion private credit market just set a fresh record for the largest loan in its history. With growing firepower, direct lenders are able to compete with banks and offer more flexible terms to borrowers.

However, demand for private equity lending has cooled in recent years, with U.S. private debt funds raising $216.2 billion in 2022, down 6% from the year before, according to data provider Preqin. Despite this, major deals using private equity firms as lenders are still occurring.

Private equity firms have also been loading more debt onto their acquisition targets than ever before, surpassing their pre-pandemic record, according to Bloomberg. This trend has been seen across multiple industries, including healthcare, technology, and consumer goods.

In addition, some of the world's top private equity firms have been buying the debt of their own portfolio companies from banks at steep discounts, as reported by Bloomberg. This allows them to take control of the debt and potentially restructure it to their advantage.

Overall, private equity debt and lending remain an important part of the financing landscape, offering alternative options to traditional bank loans. As interest rates remain low, private equity firms are likely to continue to be active in the lending market.

Private Markets and Growth

Private equity firms are increasingly turning to growth equity investments to drive returns in a low-yield environment. Growth equity is a type of private equity investment that focuses on investing in companies that are growing rapidly. These companies are typically not yet profitable, but have the potential to become highly profitable in the future.

According to the McKinsey Global Private Markets Review 2023, growth equity accounted for 14% of the private capital industry at the end of last year, up from 5% in 2005. This trend is expected to continue as investors seek higher returns in a low-yield environment.

One reason for the popularity of growth equity investments is that they offer a way to invest in the next generation of high-growth companies. These companies are often in industries such as technology, healthcare, and consumer goods, where innovation and disruption are driving growth.

Another reason for the popularity of growth equity investments is that they offer a way to invest in companies that are not yet ready for a traditional IPO. This allows private equity firms to invest in companies that have the potential to become highly profitable in the future, but are not yet ready for the public markets.

Private equity firms are also increasingly using growth equity investments to drive returns in their portfolios. According to the 2023 Private Markets Outlook from BlackRock, growth equity investments are expected to outperform other types of private equity investments in the coming years.

In summary, growth equity investments are becoming increasingly popular among private equity firms as a way to invest in the next generation of high-growth companies. These investments offer a way to invest in companies that are not yet ready for a traditional IPO and have the potential to become highly profitable in the future.

Continuation Funds and GP Stakes

Private equity firms are increasingly turning to continuation funds and GP stakes as a way to retain assets and generate returns. Continuation funds, also known as GP-led secondaries, are a type of fund that allows private equity firms to hold onto assets that are nearing the end of their lifespan. GP stakes, on the other hand, refer to investments made by private equity firms in their own management companies.

According to data from investment bank and secondaries adviser Jefferies, continuation funds accounted for 84% of GP-led transactions in 2021, totaling $68 billion. Single-asset continuation vehicles represented nearly half of GP-led volume during the same period, up from 27% in 2019. This trend is expected to continue as private equity firms seek to hold onto assets for longer and generate returns for their investors.

One of the advantages of continuation funds is that they allow private equity firms to avoid the need to sell assets at a potentially unfavorable time. Instead, firms can hold onto assets for longer and potentially generate higher returns by improving the performance of the assets. This can be particularly useful in a market downturn, where selling assets may not be the best option.

GP stakes, on the other hand, allow private equity firms to invest in their own management companies, which can provide a stable source of income and help to align the interests of the firm's management with those of its investors. This can be particularly useful for firms that are looking to expand their operations or invest in new areas.

However, there are also potential risks associated with continuation funds and GP stakes. For example, continuation funds can be complex and may involve conflicts of interest between the private equity firm and its investors. GP stakes, on the other hand, can be expensive and may not generate the returns that investors are looking for.

Overall, continuation funds and GP stakes are becoming increasingly popular in the private equity industry as firms seek to hold onto assets for longer and generate returns for their investors. While there are potential risks associated with these strategies, they can also provide significant benefits for private equity firms and their investors.

Private Credit Fund and Hedge Fund

Private credit funds and hedge funds are two types of private equity funds that have been affected by recent regulatory changes by the SEC. Private credit funds are investment vehicles that provide financing to companies that cannot obtain traditional bank loans. Hedge funds, on the other hand, are investment vehicles that use various strategies to generate high returns for their investors.

The SEC's recent regulatory overhaul has impacted private credit funds and hedge funds by increasing the compliance burden on these funds. Private credit funds and hedge funds are now required to register with the SEC and comply with new reporting requirements. This has led to increased costs for these funds and has made it more difficult for them to operate.

Despite these challenges, private credit funds and hedge funds remain attractive investment options for investors looking for higher returns. Private credit funds offer investors the opportunity to invest in non-traditional credit assets, which can provide higher returns than traditional fixed income investments. Hedge funds offer investors the opportunity to invest in a range of strategies, including long/short equity, event-driven, and macro strategies, which can provide higher returns than traditional equity investments.

In conclusion, private credit funds and hedge funds are two types of private equity funds that have been affected by recent regulatory changes by the SEC. While these changes have increased the compliance burden on these funds, they remain attractive investment options for investors looking for higher returns.

Industry News and Analysis

Private equity firms in the USA continue to embrace new investment strategies amidst macroeconomic turbulence, challenging debt markets, and global geopolitical uncertainty. According to a mid-year outlook report by PwC, the start of 2023 has seen a continuation of 2022's significant slowdown in PE-related deal activity as buyers and sellers navigate these challenges. Despite this, the PE market remained resilient, in large part due to the availability of debt from private credit funds.

In 2021, US PE deal value totalled $1.2 trillion, with the blistering pace of activity driving a boom across all deal sizes, sectors, and types. This trend is set to continue in 2023, with more than 60% of senior buyout, growth, private debt, VC, real estate, and infrastructure executives globally having, or planning to have, private wealth units, according to a survey by Private Equity International.

However, fundraising headwinds persist as limited partners (LPs) hunt for more co-investments amid the ongoing pandemic. Contributions have outweighed distributions for the fourth time in five years, according to Private Equity News. The US regulator is also targeting private equity and hedge funds, with a focus on conflicts of interest, fees, and expenses.

Despite these challenges, the industry remains optimistic, with private equity firms continuing to seek out new opportunities and investment strategies. The industry has also seen a rise in the number of private equity firms partnering with accounting firms to provide a wider range of services to clients. This trend is expected to continue, with accounting firms offering expertise in areas such as tax planning, financial reporting, and regulatory compliance.

Frequently Asked Questions

What are the latest private equity deals in the USA for 2023?

According to PwC's midyear outlook, the start of 2023 has seen a continuation of 2022's significant slowdown in PE-related deal activity as buyers and sellers navigate ongoing macroeconomic turbulence, challenging debt markets, and global geopolitical uncertainty. Over the past year, PE-related deal volumes have declined by approximately 30%. However, despite these challenges, private equity firms are still actively seeking new investment opportunities.

What are the current trends in the private equity industry in the USA?

PitchBook estimates that private equity firms spent over $1 trillion on deals in 2022, far surpassing every year prior to 2021. With regard to deal value, the typical split of 50-40-10 between buyouts, add-ons, and growth equity deals held up in 2022. But looking at deal count, there were more add-on and growth deals than usual, according to PitchBook. Additionally, private equity firms are embracing new investment strategies.

Which private equity firms are leading the way in the USA?

There are many private equity firms operating in the USA, and it is difficult to say which ones are leading the way. However, some of the largest private equity firms by assets under management include Blackstone, Carlyle Group, KKR, and Apollo Global Management.

What is the future outlook for the private equity industry in the USA?

The future outlook for the private equity industry in the USA is uncertain. The ongoing macroeconomic turbulence, challenging debt markets, and global geopolitical uncertainty continue to pose challenges for private equity firms. However, private equity firms are still actively seeking new investment opportunities and embracing new investment strategies.

What impact is private equity having on the US economy?

Private equity has a significant impact on the US economy. Private equity-backed companies employ millions of people and contribute significantly to the US economy. However, there are also concerns about the impact of private equity on workers, communities, and the wider economy.

How are private equity-backed companies performing in the current market?

Private equity-backed companies are performing well in the current market. According to a survey by Private Equity International, more than 60% of senior buyout, growth, private debt, VC, real estate, and infrastructure executives globally have, or plan to have, private wealth units. This suggests that private equity firms are confident in the performance of their portfolio companies and are actively seeking new investment opportunities.

USA Private Equity News US