PE activity softened in the first three months of 2022 but remains robust, according to EY Private Equity’s Q1 PE Pulse report.
The report recaps Q1 2022 private equity activity following a record year of dealmaking and amidst market volatility and geopolitical tension.
PE firms announced deals valued at $221 billion, declining 27% from the first quarter of last year. The also highlights that the first quarter of 2021 saw 719 deals announced valued at more than $300 billion, making it the second-most active quarter on record.
The secondaries market also thrived with GP-led deals being key drivers and accounting for more than 50% of transactions by value, signalling a shift from being historically dominated by LPs seeking to offload their interests.
Exit activity slowed as macroeconomic sensitivities heightened. Despite the steady pace of private equity dealmaking, exit activity declined significantly with PE firms announcing 296 exits in the first quarter of 2022, a 55% decline from the same period last year. Exits declined across all types including sales to strategics, sales to PE firms, sales to SPACs and IPOs, which fell a dramatic 94% from 1Q21.
The consumer and materials sectors saw greater interest this quarter, with increases in the percentage of total deal volume and value that they accounted for in 1Q22 compared to the year prior. This quarter, consumer deals accounted for nearly a quarter (24%) of deal volume and 17% of deal value while materials accounted for 13% of deal volume and 11% of deal value.