OC&C Private Equity & Transactions Overview 2022
Market Context:
- 2022 Deal Activity: The year witnessed a notably subdued deal landscape due to geopolitical tensions, inflation, interest rate hikes, and recession concerns.
- Geopolitical Impact: Europe faced significant geopolitical instability, influencing global markets.
- Economic Pressures: Rising inflation and debt availability constraints led to a focus shift towards sustainable profitability rather than rapid revenue growth.
Industry Trends:
- Hot Sector Shift: Traditionally 'hot' areas such as tech and digital assets experienced downturns as investors prioritized stability over growth.
- IPO Trend Decline: Public market valuations declined, prompting a shift towards early-stage opportunities for private equity investments.
- Pet, Health & Wellness, and Sports: These sectors remained resilient, attracting investments due to their proven growth patterns and adaptability to external challenges.
OC&C Insights:
- Commercial Depth Required: The increasing complexity of deals necessitates deeper commercial insights and robust strategic planning.
- Agility and Flexibility: The ability to adapt quickly is crucial, with a focus on creating value through innovative strategies.
- Positive Outlook for 2023: While cautious, the future looks more optimistic than earlier predictions, with data indicating lower inflation and interest rate peaks.
Sector-Specific Activities:
- Consumer Goods: Saw a more muted activity, with investments focusing on higher growth and resilient sectors like Pet, Health & Wellness, and Sports.
- Leisure: Operators showed signs of recovery as pandemic restrictions lifted, though the sector faces challenges from inflation.
- Retail: Experienced uneven performance, with value-focused operators performing better and traditional resilience patterns observed.
- B2B/Services: Investors prioritized themes beyond defensive qualities, emphasizing ESG impact, professional services, and tech-enablement.
Transaction Highlights:
- FMCG and Consumer Brands: Supported transactions in sectors like supplements, nutraceuticals, anti-aging products, and assisted living.
- Retail: Provided support for transactions involving re-financing, equity raises, and sell-side activities for businesses like Bourne Leisure, Butlins, and Footasylum.
- B2B/Services: Engaged in transactions related to testing, inspection, and certification, particularly in green sectors like smart mobility and efficient lighting.
Prospects for 2023:
- Overall Activity: Anticipates a pick-up in transaction volumes throughout the year.
- Market Conditions: Sees improvement in market conditions, offering opportunities for private equity investments across various sectors.
This summary encapsulates the key dynamics and trends observed in the private equity and transactions landscape during 2022, highlighting the challenges and opportunities faced by investors and businesses alike.
