The great deals slowdown
Private market investors might finally get to enjoy that thing known as summer vacation.
Between the lines: Deal activity has finally slowed down after years of frantic "up and to the right."
- This doesn't feel like a short-term panic pause, like we experienced two years ago when the pandemic first hit. Namely because it began before Russia attacked Ukraine, which has served to throw more molasses on the tracks.
Venture capital: Recall that we (cautiously) called a startup valuation peak in mid-January, which so far has played out. That's led to fewer late-stage and expansion-stage deals, since many companies had been raising to take advantage of non-dilutive financing.
Private equity: It's tough to finance new leveraged buyouts when banks are struggling to find buyers for tens of billions of dollars worth of existing commitments.
IPOs: The window is mostly closed and someone's about to apply a fresh coat of paint. Until public equities rebound, including the Nasdaq exiting bear territory, don't expect this to change. Why buy a new name when there's so many existing discounts?
- (I'm sorry... what I meant to say was that the macro environment when overlayed with... uh oh, here it comes again... 😂😂😂).
Fundraising: Get ready for a series of stories on the "denominator effect," as LPs calculate their Q1 returns. Private market exposure targets may remain the same, but still shrink in terms of real spending power.
The bottom line: The beaches may open early this year.