State of Private Equity – June 2022
The current and future state of private equity is complex. At CLA, we see our family and closely held business owners by of the Mega Trend on Wealth Transfer, looking for options. Our private equity clients, having record amounts of dry powder. All in a ever changing and complex Global environment.
Our seat at CLA, is unique in what we see and we would like to share our observations of the current and potential state of Private Equity as we move into the second half of 2022.
Current State – Green
•PE activity remains robust in 2022, albeit off last year’s record level of activity.
•PE investing in industrials, materials, tech, healthcare and consumer sectors.
•PE has record level of dry powder and increasingly deploying capital into mainstreet businesses.
•PE exits have been more heavily impacted, falling nearly 60% in Q1 2022 versus the same period a year ago.
•Secondaries market reaches new heights.
Future State – Yellow
•The current high inflation and rising interest rate regime will be broadly negative for fund performance and company valuations.
•Deal activity with slow, but not stop.
•Exit activity is set to slow more quickly than deal activity because most firms are not forced sellers.
•PE firms will have to adapt where they source deals and the types of companies in which they invest.
How we can help
CLA is available to help you analyze options, we understand the complexity of the investment life cycle, including how to help in value creation.
Craig Arends is a principal at CLA and is the managing principal of CLA's private equity practice. Craig brings a concentration of experience in providing accounting and transaction structuring advice for leveraged recapitalizations, purchase accounting and SEC reporting, assessing quality of earnings, and GAAP accounting. He has far-reaching experience with critiquing financial models and reviewing target companies' financial performance to identify cost reductions and/or operating efficiencies Craig has more than 30 years of experience in public accounting serving public companies, private equity groups, and companies, including a term as principal in charge of a Big Four Capital Markets Group in Moscow, Russia. He has led financial accounting due diligence projects for private equity investor groups and venture capital funds, primarily in the technology, communications, and manufacturing industries, as well as assisting with Foreign Corrupt Practice Act matters ranging from investigation of payments made, validation of compliance with corporate policies, and review of proposed transactions to ensure compliance. When not working, Craig enjoys watching any sports, but his most favorite are baseball, football and soccer.
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