Private Equity Market Update - August 2022 | Goodwin - JDSupra - JD Supra
UPDATES AT A GLANCE — AUGUST 2022
MARKET TRENDS
LBO FINANCING CONSIDERATIONS
M&A TRANSACTION CONSIDERATIONS
ESG INVESTMENT STRATEGY DISCLOSURES
Market Overview — Q2 2022[1]
Downturn in Credit Markets: In its continued effort to combat rising inflation, the Federal Reserve Bank raised its benchmark interest rate in each of March, May, June and July of this year by 25 bps, 50 bps, 75 bps and 75 bps, respectively. The impact of rising interest rates, together with global supply chain issues, geopolitical tensions and investors pulling funds from leveraged loan funds, has reverberated throughout the leveraged loan and high-yield bond markets. As a result, PE sponsors and their portfolio companies initially looked to private credit lenders to fulfill their acquisition and portfolio company financing needs, but the private credit market has not been immune to the larger macroeconomic factors affecting the syndicated loan market and, with the exception of certain sectors like technology, the private credit market has similarly cooled off.
M&A Activity: U.S. PE deal activity slowed from the record levels set in Q3 and Q4 of 2021, but it remains above the historical average on both a deal count and deal value basis. Given the complex deal environment, a slow-down in deal activity moving into second half of 2022 is anticipated as many of the deals in the first half of 2022 were signed in late 2021 or early 2022.
PE Tech Activity: IT deals are...
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