Global private markets outlook 2024
- Mixed Recovery Trends :While deal values in private equity (PE) rebounded by 20% in 2024, transaction volumes remain below 2021- 2022 levels, with holding periods elongating.
- Fundraising & Concentration: PE fundraising grew 10%, yet remains 20% below 2021’s peak. There’s growing concentration as top PE funds dominate capital allocation.
- Value Creation Imperative: With heightened market uncertainty, value creation strategies—beyond traditional levers—are necessary for return generation.
- Private Credit Expansion: Direct lenders held 57% of buyout loan volumes in early 2024, driven by high returns and bank lending constraints.
- Talent Challenges: Retention issues persist due to low carried interest and slow fundraising, while portfolio companies struggle with talent shortages.
Strategic considerations for ceo’s in pe
• Exits and Liquidity: Limited exits and elongated holding periods are a global issue, requiring liquidity solutions across different regions.
• Secondary Market Growth: Growing in Europe and APAC, the secondaries market is providing avenues for monetization and exits globally.
• Sector-Specific Opportunities: Infrastructure, energy, and digital assets are becoming attractive investment areas in Europe, Asia, and Latin America.
• Geopolitical Tensions: Ongoing geopolitical uncertainties (e.g., in Europe and Asia) are key risks that global PE firms must navigate.
• Regional Real Estate Risks: Real estate sectors in Asia and Europe face unique risks, similar to the US, particularly in commercial properties.
• Regional Consolidation: Global capital concentration is driving consolidation trends, with large funds dominating in North America, Europe, and Asia.
Tech-driven value creation across global markets
• 10-45% AI-Driven Sales Growth: Consumer businesses leveraging AI globally see up to 45% sales growth, driven by better customer insights.
• Up to 60% IT Cost Reduction: Cloud migration strategies achieve up to 60% cost savings for portfolio companies across regions.
• Global Cybersecurity Spend Rising: PE firms globally are increasing cybersecurity investments, with 25% annual growth forecasted to mitigate rising threats.
• Data Analytics as Revenue Driver: Global portfolio companies using data analytics to create new products have seen 15-20% margin increases.
• Customized Tech for M&A: Strategic buyers in APAC and Europe are prioritizing tech scalability in acquisitions, driving up demand for proprietary technologies.
Key Risks in Global PE Technology Initiatives
• $4.7 Trillion Cybersecurity Threat: Global cybersecurity breaches projected to cost $4.7 trillion by 2025, creating significant risks for underprepared portfolio companies.
• Cultural Resistance: 40% of global tech transformations in PE firms fail due to resistance in regional markets, especially in emerging economies.
• Governance Failures: Insufficient oversight globally has caused 30% of tech initiatives to miss ROI targets, particularly in high-growth regions.
• Regulatory Pressure: Rising regulations in Europe and APAC are increasing compliance costs, impacting 20% of ongoing tech projects.
• Misaligned Investments: PE tech transformations misaligned with regional exit strategies result in 15-20% valuation loss at exit.
• Tech Talent Gaps: Global tech talent shortages have increased by 35%, impacting implementation timelines and cost optimization efforts.
Leveraging Technology for Competitive Global Advantage
• Global Cost Efficiency: Rationalizing global IT operations and leveraging offshoring can deliver cost savings across different regions.
• Proprietary Tech for Global Firms: Building region-specific proprietary technologies can create competitive advantages and drive higher exit multiples.
• Capital Optimization Across Markets: Global firms should manage capital deployment efficiently across markets, especially in technology investments.
• Mitigating Global Risks: PE firms must navigate global tech and cybersecurity risks to ensure successful exits in key markets.
Strategic Takeaways for Global PE in 2024
• Capitalizing on Distressed Assets Globally: As debt issues emerge in key regions, firms should prepare to capitalize on distressed opportunities.
• Digital-First Global Approach: Leveraging digital tools and automation across global markets will drive efficiency and enhance deal flow worldwide.
• Diversifying Across Regions: Infrastructure, energy, and real estate sectors offer opportunities across developed and emerging markets.
• Agility in Global Value Creation: Firms must adopt region- specific strategies to optimize value creation amidst global market volatility.
Conclusion:
Advisory Corp is a leading firm serving traditional PE firms as well as Family Office PE / Holding Company PE divisions. We deliver Transaction Advisory, Investment Analytics, and Fractional CFO services. Our end-to-end transaction support covers M&A, capital restructuring, and strategic business reforms. We specialize in financial analysis and portfolio-level decision-making, ensuring value creation for stakeholders.
How can Advisory Corp assist you?
Our Private Equity Advisory/ Retainer Based Services includes:
• Strategy & Investment Analytics for Portfolio Companies
• Fractional CFO
• Operational & Technical Accounting Advisory
• Data & Analytics
• Strategic FP&A
Our M&A / Project Based Engagements includes:
• Turnaround & Restructuring
• Investments & LBO Consulting
• Valuation & Financial Modelling
• Financial Due Diligence
• Exit strategy & Transaction Execution
