BluWave, the business builders’ network that connects the private equity industry with best-in-class talent, industry consultants and service providers, today released its latest insights and predictions for the private equity industry in 2024. Based on forward-looking proprietary data and thousands of interactions with U.S. dealmakers, BluWave predicts the private equity market has bottomed in 2023 and will enter a new growth cycle in 2024.
“We believe private equity has called a market bottom and is moving forward on M&A and value creation projects, despite some lingering market uncertainty. As economic fundamentals improve and dealmakers are increasingly under pressure to put dry powder to work, 2024 will usher in a new cycle of economic activity – which will continue for years, barring external shocks,” said Sean Mooney, founder and CEO of BluWave. “As dealmakers enter this new cycle of growth in 2024, we expect to see increased exit momentum, greater reliance on data and analytics, and a transition from the enchantment of AI possibilities to actionable focus on AI’s practical abilities to contribute to overarching strategic objectives.”
BluWave’s key 2024 predictions include:
- An economic rebound takes root: The private equity industry is set to enter a traditional five-to-eight-year market cycle during the second half of 2024, with the Federal Reserve’s monetary policy more closely reflecting past pre-boom cycles.
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PE sponsors start selling: The exit logjam will break, driven by an increase in sponsor-backed deals. Limited partners are pressuring general partners to generate returns, leading to GPs selling assets at a relative discount to achieve quicker exits.
- Top-tier companies will continue to sell at premium valuations, but companies viewed as lower quality will adjust towards more traditional pre-2022 peak cycle valuations.
- Now is the time to buy the bottom: Private equity deals completed in 2023 and the first half of 2024 will yield the best returns over the next five-to-eight-year deal cycle, capitalizing on the bottom of the economic cycle.
- Dealmakers realize AI is a tactic – not a strategy: The AI boom will evolve, with the industry classifying and leveraging the technology as a value-creating efficiency tool that can lower costs and improve decision-making, rather than an overarching business strategy to shape companies around.
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All eyes on data: Data scientists will be the most in-demand hire across PE firms and their portfolio companies. As modern data sets expand and evolve, firms are seeking to add professionals with expertise in statistics, Python and SQL.
- Some private equity firms have already established a considerable first-mover advantage in acquiring these skilled professionals, and the rest of the industry will closely follow.
As market conditions improve and M&A activity increases, private equity’s value creation strategies are also evolving. “Throughout 2023, BluWave’s quarterly PE Industry Insights reports showed that ‘battle tested’ executives who could weather an economic downturn were the hottest executive hire among PE-backed companies,” added Mooney. “That trend is fading, and now the greatest demand is for ‘visionary, growth-oriented’ leaders, further reflecting private equity’s optimism.”
Leveraging proprietary data powered by the high volume of requests from dealmakers contacting BluWave to fill their third-party resource needs, BluWave is uniquely positioned to identify trends ahead of the rest of the market. More than 500 PE firms and thousands of portfolio companies trust BluWave as their matchmaker to advance due diligence and value creation projects. BluWave’s predictions are largely informed by the proprietary data of thousands of projects for which BluWave provides PE firms and their portfolio companies support.
In addition to end-of-year market outlooks, BluWave releases quarterly data and predictions in its PE Industry Insights Reports.
About BluWave
BluWave is the Business Builders’ Network for private equity grade service provider needs. The company’s platform combines technology, data and AI with concierge-like consultative support to expertly connect businesses with proven providers across due diligence, value creation and prep for sale. The BluWave Vetted™ network is an invite-only ecosystem of top-tier service-providing groups and individuals. Based in Nashville, Tennessee, BluWave ranks as one of America’s fastest-growing companies and today serves more than 500 leading private equity firms and thousands of proactive businesses.
Visit BluWave.net to learn more.
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