The US economy in 2023 was not really soft, but it was perceived as such and market valuations of enterprises held by PE funds were depressed.  PE Fund refrained from cashing out their investments, hoping that values would rise in the future, that  buyers next year would be more willing to spend,  and that disposition of fund investments at 2024 higher prices would create better returns for fund investors.

According to Dealogic, PE exits in 2023 totaled c $333B; exits in the prior two years were c$6B and over c$893B.  2023 exits were the lowest since 2013.

Now comes 2024 and there will be greater pressure to exit as time will be running out on some funds and since hopefully valuations of positions to be sold will have increased.  Further, companies seeking acquisitions likely have enjoyed profitable 2023s and have not expended acquisition dollars last year, so it seems that fund managers may find willing and solvent buyers for the investments that the funds need to sell.

Strategic buyers looking to purchase PE fund assets may try to balance possibly higher market valuations by careful shopping, in light of the fact that there may be something of a glut of companies for sale given lack of company sales last year.

Interest rates have stabilized and may tick downward during the course of the year, also a factor which may lead to acquisition activity.

Finally, noting the overlay of greater anti-trust enforcement particularly against roll-ups, anti-trust clearance may take a long time to achieve, particularly in markets where there is product/customer overlap and/or in regulator-targeted industry sectors such as med-tech. (See prior anti-trust post to this blog site, dated December 20)

Overall, commentators expect a pretty interesting 2024 acquisition year.