The drivers for this year’s deal landscape are a mix of strategic necessity and opportunistic timing. While some resilient assets have simply outpaced the market, other GPs are moving to exit ageing portfolios after years of delay. This upheaval has had a sobering effect on the midmarket. “Funds with a good track record are eager to hang onto it,” says Carl Bradshaw, a London Private Equity partner at Goodwin. He has clocked “more price discipline than we’ve seen compared to earlier in the cycle”, both on the deployment side, but also in terms of realizing investments. For Carl Bradshaw this year will be defined by “finding different ways to monetise some built-up equity value.” “You have to be creative,” agrees Dr Jan Schinkӧth, another Goodwin partner and chair of its Munich office. “In recent years, we’ve seen earnouts, vendor loans and other instruments, but there is still a way to go.” Though anticipating more conventional exits, including to public markets, Bradshaw identifies fund-to-fund transfers, continuation vehicles (particularly for high-performing assets), merging together portfolio investments, business unit carve-outs and combinations of these approaches being used to enable liquidity. He notes that minority recapitalizations are "more of an obvious path" than a continuation vehicle for many assets - less complex than a CV, and offering liquidity or partial exits while preserving future upside.
Read the Real Deals article for more.