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Deals and Exits Snapshot for January 2016


2/2/16

Even though the calendar reflects the start of a new year, 2015’s market challenges continued to impact transaction activity in January. Year over year, middle market deal activity in January decreased by 24% to 193 deals and exits decreased by 36% to 55, which is a 12-month low. Capital invested and capital exited sank to $2.3 billion and $3.3 billion in January respectively—also 12-month lows. We believe increased levels of transaction activity will return as market volatility and global economic conditions stabilize. Continued high valuations (though beginning to decline) in the private markets and competition from strategics are compounding challenges for private equity investors.   
 
In the coming year, we expect to see the environment for transaction activity remain somewhat volatile. Private equity firms anxious to build their portfolios will need to increase their efforts around sourcing proprietary deal flow. Industry and situation specialization will help build a more vibrant pipeline. Identifying potential deal breakers early in the process will help increase certainty of close. Building a well-thought integration plan during the diligence process will result in a more efficient return on investment.
 
For more information, please contact Jeremy Swan, a CohnReznick Principal and National Director of the Firm’s Private Equity and Venture Capital Industry Practice, at jeremy.swan@cohnreznick.com or 646-625-5716.


This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. 

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