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Private Equity, 2024 Year-End Review and 2025 Forecast

Cherry Bekaert has unveiled its comprehensive Private Equity Industry Report, outlining essential trends and movements that shaped the private equity sector throughout 2024. This annual study showcases a renewed sense of optimism following a prolonged period of market downturn, marking the end of the industry's longest period of decline in over a decade.

The report pinpoints a resurgence of activity catalyzed by improved economic conditions, decreasing valuation discrepancies, and abundant opportunities across various sectors, setting a strong stage for future growth. As the private equity landscape evolves, the report suggests that firms are well-positioned for an uptick in deal-making activities.

Key Insights from the 2024 Report

• - Increased Deal Value: The value of private equity transactions in the U.S. saw a significant increase of 19% year-over-year, demonstrating a robust and resilient deal-making momentum. Despite some lingering softness in the market, signs of stabilization are increasingly evident.
• - Closing Valuation Gaps: One of the standout findings is the narrowing gap in valuations which has contributed to more successful deal closures. This development is vital for fostering a healthier M&A climate.
• - Rising Exits: Indicators point toward an impending surge in private equity exits in the coming cycle, reflecting a return of confidence among investors and sponsors alike.
• - Record Megadeals: The industry noted a resurgence of 'megadeals' that rivaled peak levels not seen since 2021, signaling possible new benchmarks in transaction sizes.
• - Sector Performance: Notably, the technology sector comprised over 20% of total buyout investments, highlighting a trend towards tech-focused opportunities. Healthcare also showed significant activity, with large transactions in healthcare services and biopharmaceuticals bolstering the market.
• - Financing Conditions: Improved financing terms are paving the way for a vibrant deal-making environment in 2025. Firms that can navigate existing challenges such as regulatory uncertainty are expected to capitalize on forthcoming opportunities.

Expert Predictions for 2025

Scott Moss, Partner and Financial Industry Practice Leader at Cherry Bekaert, remarked, "The PE landscape is positioned for continued growth and a wealth of opportunities in 2025, driven by innovation and strategic investments. Funds that monitor and adapt to these changing dynamics will likely reap the rewards."

After several years marked by cautious optimism without substantial progress, the outlook for 2025 is infused with hope. The renewed potential for growth and ample deal opportunities reflects a shift towards greater stability and a favorable regulatory environment, providing fertile ground for private equity investments.

In conclusion, the 2024 Private Equity Report serves as a valuable resource for investors, financial sponsors, and industry professionals, offering vital insights that can guide strategies for the year ahead. The combination of economic recovery, closing valuation gaps, and sector opportunities highlights the evolving nature of private equity and the exciting paths that lie ahead for 2025.

For a deep dive into the intricacies of the Private Equity landscape, access the full report on Cherry Bekaert's official website.