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PE exits were historically slow in Q1, according to PitchBook’s Q1 2023 US PE Breakdown. All exit ramps—corporate acquisitions, IPOs and secondary buyouts—were down significantly. SBO activity has been in a teeter totter pattern since Covid. Q4 2021 saw 318 SBOs—the most ever recorded—but was bookended by historically low quarters in Q2 2020 and Q1 2023. The chart above shows how steady SBO activity was prior to Covid, but it’s been anything but since then.
PE buyers and sellers are both in cautious territory; sellers are hesitant to sell low while buyers are navigating higher financing costs and macro uncertainties. Pricing disagreements happen in those environments, and deals don’t get done as a result. The IPO window is effectively closed—only 4 PE-backed listings happened in Q1. The only game in town is corporate M&A, which was down in Q1 but relatively healthy compared to the other exit routes. With selling opportunities down across the board, sponsors are opting to hold onto portfolio companies for now, making more improvements and waiting for the weather to improve.
(Past performance is no guarantee of future results.)
Private Credit Defaults 101: Back to School
As Labor Day approaches, the unofficial end of summer is upon us. But, before we get too sad, there is also the familiar back-to-school energy.