2023贝恩全球私募基金报告 GLOBAL PRIVATE EQUITY REPORT 2023

GLOBALPRIVATEEQUITYREPORT2023

BAiN&CMPANY

AboutBain&Company’sPrivateEquitybusiness

Bain&Companyistheleadingconsultingpartnertotheprivateequity(PE)industryanditsstakeholders.PEconsultingatBainhasgrowneightfoldoverthepast15yearsandnowrepresentsaboutone-thirdofthefirm’sglobalbusiness.Wemaintainaglobalnetworkofmorethan2,000experiencedprofessionalsservingPEclients.Ourpracticeismorethantriplethesizeofthenext-largestconsultingcompanyservingPEfirms.

Bain’sworkwithPEfirmsspansfundtypes,includingbuyout,infrastructure,realestate,anddebt.Wealsoworkwithhedgefunds,aswellasmanyofthemostprominentinstitutionalinvestors,includingsovereignwealthfunds,pensionfunds,endowments,andfamilyinvestmentoffices.Wesupportourclientsacrossabroadrangeofobjectives:

Dealgeneration.Weworkalongsideinvestorstodeveloptherightinvestmentthesisandenhancedealflowbyprofilingindustries,screeningtargets,anddevisingaplantoapproachtargets.

Duediligence.Wehelpsupportbetterdealdecisionsbyperformingintegratedduediligence,assessingrevenuegrowthandcost-reductionopportunitiestodetermineatarget’sfullpotential,andprovidingapost-acquisitionagenda.

Immediatepost-acquisition.Afteranacquisition,wesupportthepursuitofrapidreturnsbydevelopingstrategicblueprintsforacquiredcompanies,leadingworkshopsthatalignmanagementwithstrategicpriorities,anddirectingfocusedinitiatives.

Ongoingvalueaddition.Duringtheownershipphase,wehelpincreasethevalueofportfoliocompaniesbysupportingrevenueenhancementandcost-reductioninitiativesandrefreshingtheirvalue-creationplans.

Exit.Wehelpensurethatinvestorsmaximizereturnsbypreparingforexit,identifyingtheoptimalexitstrategy,preparingthesellingdocuments,andprequalifyingbuyers.

Firmstrategyandoperations.WehelpPEfirmsdevelopdistinctivewaystoachievecontinuedexcellencebydevisingdifferentiatedstrategies,maximizinginvestmentcapabilities,developingsectorspecializationandintelligence,enhancingfund-raising,improvingorganizationaldesignanddecisionmaking,andenlistingtoptalent.

Institutionalinvestorstrategy.Wehelpinstitutionalinvestorsdevelopbest-in-classinvestmentprogramsacrossassetclasses,includingprivateequity,infrastructure,andrealestate.Topicsweaddresscoverassetclassallocation,portfolioconstructionandmanagerselection,governanceandriskmanagement,andorganizationaldesignanddecisionmaking.Wealsohelpinstitutionalinvestorsexpandtheirparticipationinprivateequity,includingthroughcoinvestmentanddirectinvestingopportunities.

Bain&Company,Inc.

131DartmouthStreet

Boston,Massachusetts02116USA

Tel:+16175722000

Copyright©2023Bain&Company,Inc.Allrightsreserved.

BAIN&COMPANY○

1

GlobalPrivateEquityReport2023

Contents

PerfectStormorTempestinaTeapot?

2

PrivateEquityOutlookin2023:AnatomyofaSlowdown

3

Investments

9

Exits

17

Fund-raising

20

Returns

24

APrivateEquityLensontheEnergyTransition

30

Web3RemainsHighlyRelevantforPrivateEquity

39

WhyPrivateEquityIsTargetingIndividualInvestors

55

SolvingforPrivateEquity’sInflationConundrum

67

BAIN&COMPANY○

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GlobalPrivateEquityReport2023

PerfectStormorTempestinaTeapot?

DearColleague:

It’seasytothinkofDickensandATaleofTwoCitieswhenlookingbackon2022(althoughIthinkweareinacyclethatexceedstheboundaryofacalendaryear).Thefirstsixmonthsresembled2021’srecord-breakingactivity:incrediblenumbersofdeals,lotsofexits,andsubstantialfundscommittedtothechaseforthenextfiveyears.

ThensomethinghappenedinJune—inshort,theFederalReservehappened.Themovetoraiseinterestratesby75basispoints,andthenkeepraisingthem,wasashotheardroundtheworld,signifyingtheendofcheapdebtinbuyoutmarketsandsparkingstrongconcernsaboutpersistentinflation.Therateincreasesfueledspeculationaboutrecession,which,inturn,spookedbanksfromprovidingleveragedloans.Thedominoesfellfromthere,topplingyear-endtotalsfordeals,exits,andfund-raising.The“pause”hascontinuedinto2023,anditspersistencewillbedeterminedbyhowquicklymacrofactorsstabilize.

ThetrendschangingthePElandscapethatwelookintodeeplythisyearincludetherealandimaginedimpactofweb3oninvestmentmarkets,thedriveforindividualorretailcapitalbyGPs,andwhatthegreatenergytransitionreallymeansforinvestors.Lastly,wepeerintoourcrystalballtogaugetheimpactofpersistentinflationonPEportfoliosandcomeupwitharathercounterintuitivebutsimplesolutiontopreservereturnsforLPs.

WehopeyouenjoyourGlobalPrivateEquityReport2023,andwelookforwardtoseeingmanyofyouinpersonthisyear.

HughMacArthur

Chairman,GlobalPrivateEquity

3

PrivateEquityOutlookin2023:

AnatomyofaSlowdown

Inflationandrisingratesputanendtotheextraordinarypost-Covidsurgeindealmaking,settingupachallengingyearahead.

ByHughMacArthur,RebeccaBurack,GrahamRose,ChristopheDeVusser,KikiYang,andSebastienLamy

Asextraordinaryandresilientasthepost-Covidrallyinglobalprivateequityprovedtobe,itwasultimatelynomatchfortheFed.

Forthefirstsixmonthsof2022,theindustryextended2021’srecord-shatteringburstofdealactivity,despitepersistentinflation,theinvasionofUkraine,andgrowingtensionswithChina.Then,inJune,whenUScentralbankersissuedthefirstinaseriesofthree-quarter-pointinterestratehikes—andtheircolleaguesaroundtheworldfollowedsuit—bankspulledbackfromfundingleveragedtransactionsanddealmakingfelloffacliff,pullingexitandfund-raisingtotalsdownwithit(seeFigure1).

Giventheheightsfromwhichtheyfell,buyoutdealvalue($654billion),exits($565billion),and

fund-raising($347billion)allfinished2022withrespectabletotalsinahistoricalcontext(seeFigure2).Butthesuddenreversalmarkedtheendofanupcyclethathasendured(withabriefCovidbraketap)since2010,whentheindustryemergedfromtheglobalfinancialcrisisandproduceda12-yearrunofstunningperformance.

Itremainstobeseenwhethertheabruptshiftfromaccommodationtotighteningwilltriggerwhatcouldbecalledthemostanticipatedrecessioninhistorythathasn’thappenedyet—atleastnotintheUS.AtightlabormarketandlingeringCovid-relatedstimulushavesofarkepttheeconomylimpingalong.(Thefleetingtwo-quarterdipin2022wasn’tofficiallydeemedarecession.)

Yetthere’snodenyingtheimpactoftheunprecedentedmixofmacroforcesinplay(seeFigure3).Theresultingriseinrateshasalreadyshutoffthespigotofcheap,obtainabledebtfinancing.And

4

GlobalPrivateEquityReport2023

Figure1:Investments,exits,andfund-raisingalldeclinedin2022asmacroforcestooktheirtoll

Investments

Globalbuyoutdealvalue

Dealcount

$1,250B3,000

Exits

Globalbuyout-backedexitvalue

Exitcount

$1,250B2,000

Fund-raisingGlobalbuyoutcapitalraised

Countoffundsclosed

$600B800

1,000

750

500

250

0

2,000

1,000

0

201220172022

1,000

750

500

250

0

1,500

1,000

500

0

201220172022

400

200

0

600

400

200

0

201220172022

Notes:Investments—excludesadd-ons;excludesloan-to-owntransactionsandacquisitionsofbankruptassets;basedonannouncementdate;includes

announceddealsthatarecompletedorpending,withdatasubjecttochange;Exits—includesfullandpartialexits,bankruptciesexcluded;IPOvaluerepresentsofferamountandnotmarketvalueofcompany;Fund-raising—datagroupedbytheyearinwhichfundsheldtheirfinalclose;countisofallfunds,includingthoseforwhichfinalclosedataisunavailable;buyoutcategoryincludesbuyout,balanced,coinvestment,andcoinvestmentmultimanagerfunds;excludesSoftBank

VisionFund

Sources:Dealogic;Preqin;Bainanalysis

Figure2:Dealmakingandexitsslowedthroughthesecondhalfoftheyear,whilefund-raisingremainedbelow2021’speak

Investments

Globalbuyoutdealvalue,quarterly

Exits

Globalbuyoutexitvalue,quarterly

Fund-raising

Globalbuyoutcapitalraised,

quarterly

$300B

250

200

150

100

50

0

Dealcount

600

400

200

0

2022

2020

2021

$300B

250

200

150

100

50

0

Exitcount

400

300

200

100

0

2022

2021

2020

$200B

150

100

50

0

Countoffundsclosed300

200

100

0

202020212022

Notes:Investments—excludesadd-ons;excludesloan-to-owntransactionsandacquisitionsofbankruptassets;basedonannouncementdate;includes

announceddealsthatarecompletedorpending,withdatasubjecttochange;Exits—includesfullandpartialexits,bankruptciesexcluded;IPOvaluerepresentsofferamountandnotmarketvalueofcompany;Fund-raising—datagroupedbytheyearinwhichfundsheldtheirfinalclose;countisofallfunds,includingthoseforwhichfinalclosedataisunavailable;buyoutcategoryincludesbuyout,balanced,coinvestment,andcoinvestmentmultimanagerfunds;excludesSoftBank

VisionFund

Sources:Dealogic;Preqin;Bainanalysis

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GlobalPrivateEquityReport2023

Figure3:Thecurrentmacroenvironmentposesarangeofsignificantchallenges

Natural

Globalfoodpricingand

Cascading

supply

shortfalls

Mounting

inflationand

recession

risks

Financial

market

instability

Real

economyslowdown

Geopoliticalrealignment

Technological

disruption

Potential

fordelayed

impact

Lossof

Russiaand

Ukraine

marketsand

assets

resource

shortages

supply

disruption

Trendsunderway

Source:Bain&Company

deepambiguityaboutthefuturecourseofglobaleconomicactivityislikelytocastashadowovertheprivateequityvaluechainthrough2023’sfirsthalf,ifnotbeyond.

Whatmakesthecurrenteconomicslowdowndifferentfromtheonebroughtonbytheglobalfinancialcrisisisthelackofclarityaboutwhat’shappening.There’snoLehmancollapse,nohousingmeltdown,nosharpfalloffineconomicactivitytosignaladefinitiveseachange.Instead,theglobaleconomyispresentinginvestorswithconditionsfewamongthemhaveeverseenbefore.AsifwarinEurope,energyshocks,andsupplychainissuesweren’tenough,inflationhasn’tbeenthishighorpersistentin40years(seeFigure4).Theresultingriseininterestrateshasreversedadownwardtrendthathasdefinedinvestmentmarketsforaslongasanyonecanremember.

Thenetresultisthedreaded“Uword”—uncertainty,adealkillerifthereeverwasone.Asbuyers,sellers,andlendersallwaitforclarityaroundtheeconomicforcesthatcouldaffectcashflows,uncertaintywillcontinuetoactasacapondealactivity,especiallyforthelargesttransactionsthatrequirethemostleverage.Dealmakersarestillfindingwaystofinancesmallertransactionswithprivatecreditandlargerequityinfusions.Buttheoveralldeclineinnewdealsandexitswilllikelypersist,creatingaknock-oneffectforfund-raising.

Limitedpartners(LPs)willneedtimetoworkthroughimbalancesintheirportfoliosbroughtonbymarketswingsandaslowdownincashbackfrompreviouscommitments.Theshort-termcashsqueeze

6

15%

10

GlobalPrivateEquityReport2023

Figure4:Withinflationhittingitshighestlevelsin40years,mostprivateequityfundmanagersareinunchartedterritory

USConsumerPriceIndexgrowthrate(allitems,quarterlyrollingannualpercentagechange)

1960–1980avg.CPI:~5%

1981–2008avg.CPI:3%–4%

2009–Q22021avg.CPI:1%–2%

Mostseniorpartnerorfundmanagingdirector

Avg.

tenure

Partnerorfundmanagingdirector

Principal/director/VP

Associate

5

0

196070809000102022

Notes:Showsquarterlygrowthratefromthesameperiodinthepreviousyear,notseasonallyadjusted;tenureestimatedusingdataacrossthe30topbuyoutfirmsdeterminedbycumulativefund-raisingtotalsoverthelast10years

Sources:USBureauofLaborStatistics(datathroughJuly1,2022);BainAuraSMtalentanalyticsplatform;Bainanalysis

willmakeitdifficultforthemtoextendnewcommitments,especiallyafterseveralyearsofrecord-breakingallocationstoprivateequity.RaisingnewcapitalwillbeparticularlyhardformidsizegeneralistfundsasLPscontinuetofavorspecialistsandlargefundswithtop-tierperformance.Thesamecouldbesaidforgeneralpartners(GPs)challengedtogeneratedistributionsbecausetheirexitvolumeisdependentonthe(now-moribund)marketforinitialpublicofferings.

Howlongtheseconditionswilllastisimpossibletopredictwithanyaccuracy.Butamidtheshort-termgloom,thereisnothingtosuggestthelong-termoutlookforprivatecapitalisanylesspositivethanitwasin2021.Indeed,afterattractinganastonishing$10.7trillionincapitaloverthelastdecade,theindustrymaybegettingevenmoreappealingasinvestorscontinuetochafeatthelimitationsofthepublicmarkets.

ThenumberofUSpubliccompanieshasdeclinedbyaboutathirdoverthelast25years,andtheremainingpoolisdominatedbyahandfuloflargetechfirmsthatholddisproportionateswayovertheindexes.Thatmakesitincreasinglydifficulttofindadequatediversificationinthepublicmarkets.Privatemarketreturns,meanwhile,areoutpacingpublicreturnsovereverytimehorizon,whilealternativefundsprovideaccesstothebroadglobaleconomyandthefullestrangeofassetclasses.Theseadvantagesexplainwhyprivatemarketscontinuetogrowrelativetothepublicmarkets.

7

GlobalPrivateEquityReport2023

GPsarestokingthatgrowththroughongoingproductinnovation.Theyhavesteadilydevelopednewtypesoffundstructuresacrossassetclasses,helpingtheindustrybecomeincreasinglyattractivetoLPswithhighlyspecificallocationrequirements.Whilebuyoutremainstheindustry’slargestassetclass,avarietyofothershavebeengrowingatdouble-digitrates(seeFigure5).GPsarealsodiversifyingtheirsourcesofgrowthbystructuringproductsformassive,butrelativelylesspenetrated,poolsofcapitallikesovereignwealthfundsandwealthyindividualinvestors.

Historysuggeststhatclearsightlines—notidealeconomicconditions—arewhatwillbringtheenergybacktodealmaking.Ifinterestratesremainhigher,GPscanworkwiththat;ifuncertaintypersists,sowillthehesitancytocommit.Theindustryended2022witharecord$3.7trillionindrypowder,soGPswillbeeagertoputittoworkassoonaspossible.Butbuyers,sellers,andlendersarealllookingforclearersignalsaboutwhereGDPisheadedandhowmuchfurthertherateshikeshavetogo.

Thelessonsfromthelastdownturnareparticularlyusefulinplottingacoursethroughthistimeofuncertaintyandturbulence.Putsuccinctly,thewinnersdidn’tpaniclasttimearound.Theyproperlyassessedtheirriskscenarios,createdmitigationplans,andsetthemselvesuptoaccelerateoutofthedownturn.Thishasimplicationsforbothdealmakingandportfoliomanagement.

Mitigatingrisk.Confidenceboilsdowntolearninghowtounderwriteriskinatimeofgreatmacrouncertainty.ThisconfidenceflowsfromadifferentsetofmusclesthanmostGPsareusedtoexercising.

Figure5:Buyoutcontinuestoexpand,butmostotheralternativeassetclasseshavebeengrowingfasteroverthelastdecade

GlobalAUMbyassettype($T)

CAGR

2012–Q222

12.8

11.6

9.2

7.4

6.3

5.5

4.4

4.7

4.1

4.0

$3.5T

2012131415161718192021Q222

Other

SecondariesDirectlendingInfrastructureGrowthequity

Realestate

Venturecapital

Buyout

Total

12%

16%

29%

18%

20%

10%

24%

11%

15%

Notes:Buyoutcategoryincludesbuyout,balanced,coinvestment,andcoinvestmentmultimanagerfunds;othercategoryincludesfund-of-funds,mezzanine,naturalresources,hybrid,privateinvestmentinpublicequity,andrealassets

Source:Preqin

8

GlobalPrivateEquityReport2023

Dealteamshavebecomeincreasinglyspecializedoverthepastcycleandmayhaveakeenunderstandingofhowtoevaluatethemicroforcesimpactingatargetcompany.Butonceevery10years,macromatters—alot—asthedangerincreasesthattheworldwillshiftunderyourfeet.

Theduediligencechallengeistoanalyzewithspecificityhowtheseshiftsmightimpactyourcompanyanditsindustry.Theremaybe10macrofactorsouttheredisruptingglobalactivity,butchancesare,only2or3ofthemreallymatterforyourdeal.Thequestionthenbecomes,whatistherangeofscenariosorpossibleoutcomesrelativetothosecriticalfewmacrofactors,andwhatisyourmitigationplanforeachscenario?Thisprocessisaboutconsideringafanofpossibleoutcomes(notjusttheoneortwomostlikely)andthinkingthroughwhetherthefanisasymmetricallygoodorbad.

Thewinnerslasttimearoundusedthiskindofinsighttogetbackinthegameasquicklyas

possible.Thedataisclear:Dealsdonethroughadownturngeneratesuperiorreturnsovertime

(seeFigure6).Leaderskeepfindingdealsthattheylikeandcanunderwriteconfidentlybymakingsurethemacrofactorsareaccountedfor.Theyalsostayaggressiveandaren’tdeterredbylingeringadversecapitalconditions.Ifadealtargetsagoodassetatagoodprice,itmaybeworthgettingitdonewithmoreequityorahigherpriceonthedebtthanyou’dlike.Youcanalwaysfixthebalancesheetwhenconditionsimprove,butwaitingriskslosingavaluableopportunitytoprofitfrom

therebound.

Figure6:Investmentsmadecomingoutofadownturntypicallygeneratesuperiorreturnsovertime

GlobalbuyoutdealIRRbyyearofentry

100%

Techbubble

Globalfinancialcrisis

75

5048

37

2828

42%40

13131013

78

0

251823192521221618232324252220

–25

199394959697989900010203040506070809101112131415161718

MedianTopquartileBottomquartile

Notes:Includesfullyandpartiallyrealizeddeals;allfigurescalculatedinUSdollars;post-2018datanotshown,asmostdealsenteredlaterthan2018arestillunrealized

Source:DealEdgepoweredbyCEPRESdata(asofDecember22,2022)

9

BAIN&COMPANY○

GlobalPrivateEquityReport2023

Preparingcompaniestowin.Withintheportfolio,overreactionisdeadly.Whenthecycleturns,theimpulseistostartsellingthefurnitureatportfoliocompaniesandslashingcoststothebone.Thatmayshieldthebalancesheetforawhile,butitwillinevitablycrippleperformance.Whileitmakespracticalsensetoconservecash,drawdownlinesofcredit,andotherwisebuildawarchestforsurvivingarecession,it’salsoimportanttolookforopportunitiestostayonoffense.

Acceleratingoutofrecessionstartswithtakingafreshlookataportfoliocompany’scompetitivepositionandplottinghowtousethedownturntotakemarketsharefromcompetitors.

Acceleratingoutofrecessionstartswithtakingafreshlookataportfoliocompany’scompetitivepositionandplottinghowtousethedownturntotakemarketsharefromcompetitors.Thisalwaysdependsonsubsectordynamicsandthestrengthofthecompetition.Butthecompaniesthatareprudentlyaggressive—vs.conservativeandreactive—aretheonesthatshiftprofitpoolsduringrecessions.Discerningopportunity,whilemusteringthewherewithalandcouragetogoafterit,endsupgeneratingsuperiorperformanceovertime.

Nowforamoredetailedlookatwhathappenedin2022.

Investments

Whilealternativeinvestmentsoveralltrendeddownwardin2022,thebuyoutandgrowthcategoriestookthebruntofthemacroheadwinds.

Buyoutblues.Globalbuyoutvalue(excludingadd-ons)totaled$654billionfortheyear,a35%declinefrom2021.Overalldealcount,meanwhile,fell10%to2,318transactions(seeFigure7).Intermsof

value,2022’swasstillthesecond-bestperformancehistorically.Butthat’sbecauseoftheextraordinarymomentumintheyear’sfirsthalf.

Comingoff2021,whentheindustrycompleteddealsworth$1trillion,dealmakerschargedintothefirstfewmonthsof2022seeminglyintentongeneratinganothertrillion-dollaryear.Butwhencentralbankersaroundtheworldbegantighteningdowntocombatpersistentlyhighinflation,second-halfactivityfelloffprecipitouslyineverymajorregion(seeFigure8).Theespeciallysharpdrop-offin

Asia-PacificdealmakingreflectsrepeatedmarketshutdownsduetoCovidrestrictions.Buyoutcountfellorgrowthwasmutedacrossallsectors,althoughtechnologyretaineditsnearly30%shareofallbuyoutdealsglobally(seeFigure9).

10

1,012

725

2,000

654

501

0

0

0

0

2020

2021

2022

GlobalPrivateEquityReport2023

Figure7:Globalbuyoutvaluedroppedbymorethanathirdin2022asbanksveeredawayfromlargetransactionsoverthesummer

Globalbuyoutdealvalue,byregion

$1,200B

1,000

800

600

400

200

0

Deal

count

3,000

694

484

480

430

372

339

1,000

300

295

295

222

230

194

219

93

0

Restofworld

Asia-

Pacific

Europe

North

America

Total

Changeindealvalue

2022vs.2022vs.

20212017–21avg.

–72%

–59%

–28%

–30%

–35%

–47%

–33%

22%

27%

12%

20050607080910111213141516171819202122

Avg.dealsize($M)

2564944761651192292542163103034455206457327618191,245964

Notes:Excludesadd-ons;excludesloan-to-owntransactionsandacquisitionsofbankruptassets;basedonannouncementdate;includesannounceddealsthatarecompletedorpending,withdatasubjecttochange;geographybasedontarget’slocation;averagedealsizecalculatedusingdealswithdisclosedvalueonly

Sources:Dealogic;Bainanalysis

Figure8:Buyoutscontinuedtosoargloballyinearly2022,butmomentumslowedsubstantiallyacrossregionsinthesecondhalf

NorthAmerica

Buyoutdealvalue,quarterly

Count

Europe

Buyoutdealvalue,quarterly

Count

$125B

400

400

$150B

100

300

300

100

75

200

200

50

50

100

100

25

2020

2021

2022

Asia-Pacific

Buyoutandgrowthdealvalue,quarterly

$150B

Count

800

100

50

0

2020

2021

2022

600

400

200

0

Notes:NorthAmericaandEurope—excludesadd-ons;excludesloan-to-owntransactionsandacquisitionsofbankruptassets;basedonannouncementdate;includesannounceddealsthatarecompletedorpending,withdatasubjecttochange;geographybasedontarget’slocation;Asia-Pacific—includesbuyout,growth,early-stage,privateinvestmentinpublicequity,turnaround,andotherdeals;excludesrealestate;excludesdealswithannouncedvaluelessthan

$10million;includesinvestmentsthathaveclosedandthoseatagreement-in-principleordefinitiveagreementstage

Sources:Dealogic;AVCJ;Bainanalysis

11

GlobalPrivateEquityReport2023

Figure9:Growthwasdownormutedacrossallsectors,althoughtechnologystillaccountedforalmost30%ofallbuyoutdealsglobally

Globalbuyoutdealcount,bysector

2.5

2.3

2.3

2.3

2.2

2.1

2.1

2.1

2.1

2.1

1.9

2.0

1.8

10111213141516171819202122

Tech's

shareof17181922222121212527292928

total(%)

Publicsector

Telecommunications

Realestate

Transportation

Retail

Mediaandentertainment

Utilitiesandenergy

Financialservices

Consumerproducts

Healthcare

Services

Industrials

Technology

2022vs.2021

–13%

–27%

–2%

3%

–24%

–5%

–3%

–1%

–24%

–15%

3%

–5%

–12%

Notes:Excludesadd-ons;excludesloan-to-owntransactionsandacquisitionsofbankruptassets;basedonannouncementdate;includesannounceddealsthatarecompletedorpending,withdatasubjecttochange

Source:Dealogic

Thebankingindustry’sreluctancetolendtolargeleveragedtransactionsstartinginmidsummerdictatedhowtheyearindealmakingultimatelyunfolded.Asyieldsrosesharply,thenumberof

syndicatedloansforleveragedbuyoutsdroppedlikearock.AcrosstheUSandEurope,leveragedloansfell50%to$203billionasvolumeplummetedintheyear’ssecondhalf(seeFigure10).Theresultwasadeclineinthesortoflarge,high-leveragetransactionsthathavebuoyeddealvalueforyears.Averagedealsizefell23%to$964millionafterclimbingsteadilyeveryyearsince2014toarecordhighin2021of$1.2billion(seeFigure11).

Withthebanksessentiallyclosedforbusiness,smallertransactionsrequiringlessdebtpickedupshareintheoveralltotals.GPsturnedtodirectlenderssuchasSixthStreetPartnersandAresCreditGrouptofinance80%ofallmiddle-marketloansduringtheyear(seeFigure12).

Theappealandfeasibilityofsmallerdealscanbeseeninthegrowthofadd-ons,dealsthatarefinancedfromthebalanceshee