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Sentiment Dampens For PE Industry

Uncertainty in the economy, coupled with inflationary and interest rate pressures are dampening sentiment in the Canadian private equity (PE) industry, says a poll of private equity and pension fund stakeholders by Torys LLP. But, despite the challenging conditions that are set to endure in 2023, industry professionals can see reasons to be optimistic. It found that 53 per cent of respondents expect overall merger and acquisition activity to worsen a little in 2022/23 compared to the previous year. On deal volume, 52 per cent expect a smaller number this year and 21 per cent expect average deal size to worsen (56 per cent expect it to stay the same). When it comes to raising funds, 38 per cent believe it will be much more difficult this year. However, although valuations, access to capital, and liquidity are under pressure, well-positioned buyers can find opportunity. Distressed assets are a potential attractive target cited by one in seven respondents and there are signs that the valuation gap between buyers and sellers is narrowing while few respondents expect valuation multiples to increase.

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