2022 Private Equity Midyear Review and Outlook

1 August 2022
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Letter from the Editors

As we head into the second half of the year, geopolitical and economic uncertainties persist, and markets around the globe have slowed accordingly. While private equity fundraising and M&A activity levels remained generally strong in the first half of the year (although comparatively weaker than 2021), the macroeconomic environment, market volatility and heightened regulatory oversight present challenges to which the private equity industry will need to adapt. We may see increasing competition in fundraising in the second half of the year, as the demand by sponsors for capital continues to be strong, as well as increasing use of bespoke structures that are tailored to investors’ needs and of warehousing vehicles as alternative sources of capital. Meanwhile, as overall M&A activity slows, we anticipate that continuation funds and fund-to-fund transactions will remain popular. More generally, we expect parties to deploy more creativity in structuring and bridging valuation gaps to get deals over the finish line, including in the secondaries market as well as M&A and leveraged finance transactions.

Changes also continue to unfold on the regulatory front worldwide, creating additional compliance obligations for sponsors and impacting execution of transactions. We have previously reported about heightened scrutiny by U.S. antitrust regulators on the private equity industry (see FTC Sharpens Focus on Private Equity and Navigating the Dynamic World of Antitrust Divestitures). In addition, as interest in socially responsible business practices and investment strengthens, regulators in the United States, the UK and the European Union have either published or already put into effect ESG-related disclosure proposals.

We hope you find the 2022 Private Equity Mid-Year Review and Outlook to be a helpful reference to the remarkable array of market and regulatory changes currently underway.