Following two years of challenging market conditions, 2024 was a year in which green shoots finally began to emerge in the private equity M&A market and is likely to be seen as a transitional year for the private capital industry.
A significant reduction in inflation, and interest rates beginning to be cut across the UK, Europe and the US, resulted in increasing levels of confidence amongst private equity sponsors in the wider economic environment. However, whilst economic confidence grew, caution remained the order of the day as the outcomes of elections in the UK, US and France were awaited, as well as the most keenly anticipated UK budget in a generation. Whilst significant sale preparation work was undertaken in 2024 across a range of sectors, this has not yet fully translated into public and private transaction volumes.
Of the 56 firm bids made in 2024, 24 were made by buyers backed by private equity and other funds (43%), compared to 36 of 57 bids made in 2023 (63%) (“P2Ps“). 18 of the 24 P2Ps were all-cash offers, with the remaining six being cash offers with an alternative unlisted securities offer. We take a closer look at these alternative unlisted securities offers in the next section.
P2Ps also contributed to the increase in big-ticket deals seen across the market in 2024, with eight of the 17 (47%) offers made with a deal value in excess of £1 billion having a buyer backed by private equity and other funds. Perhaps unsurprisingly given the size of deals, buyers on P2Ps continued to cash confirm offers using committed equity co-investment vehicles, and provided for pre- and post-completion syndications of equity as a means of financing the consideration payable to shareholders.
As we move into 2025, whilst there remains some political uncertainty, private equity continues to be sat on very high levels of uninvested capital (“dry powder“) and quality UK public assets may continue to look like attractive opportunities relative to private market valuations, particularly if interest rates remain stable or fall.
We were delighted to co-author a guide for US sponsors on public takeovers in the UK with Cravath, Swaine & Moore LLP
