10
Market sentiment
Level of competition¹
View on 2023 pricing environment¹
- Split by number of respondents
- Responses highlighted that the secondary market entering into 2023 was perceived as less competitive than it was entering into 2022. There was a relative oversupply of transactions in 2022, with buyers being chased for attention rather than chasing for transactions to close.
- Over 50% of the respondents believe that LP-led and GP-led deals will be cheaper in 2023 with most of the remaining participants of the opinion that there will be little change in the pricing for both types of transactions.
Short-term pipeline of deal flow¹, ²
By amount transacted ($)
Forecasted transaction volume¹
- Split by number of respondents
- Relative to 2022 and 2021 for 2023 and 2022, respectively
- Buyers’ expectations for the near-term 2023 pipeline of deal flow is predominately neutral with over 60% expecting no change. Given the lower pricing environment, there has been an expectation that sellers will wait for audited year-end results or better market conditions before launching new sales initiatives. This would mean no material increase in momentum until the second half of 2023. The current activity we are seeing in the market may prove this thesis to be wrong.
- Forecasted 2023 transaction volume is bullish compared to 2022 sentiment with 90% of the respondents expecting volume will be at least $100 billion and 53% expecting it to reach over $125 billion. Overallocation issues will not be easily resolved and GPs are continuing to adopt continuation funds in growing numbers; these two factors alone will most certainly drive market volumes once secondary funds are flushed with new cash to invest.
Level of competition¹
View on 2023 pricing environment¹
- Split by number of respondents
- Responses highlighted that the secondary market entering into 2023 was perceived as less competitive than it was entering into 2022. There was a relative oversupply of transactions in 2022, with buyers being chased for attention rather than chasing for transactions to close.
- Over 50% of the respondents believe that LP-led and GP-led deals will be cheaper in 2023 with most of the remaining participants of the opinion that there will be little change in the pricing for both types of transactions.
Short-term pipeline of deal flow¹, ²
By amount transacted ($)
Forecasted transaction volume¹
- Split by number of respondents
- Relative to 2022 and 2021 for 2023 and 2022, respectively
- Buyers’ expectations for the near-term 2023 pipeline of deal flow is predominately neutral with over 60% expecting no change. Given the lower pricing environment, there has been an expectation that sellers will wait for audited year-end results or better market conditions before launching new sales initiatives. This would mean no material increase in momentum until the second half of 2023. The current activity we are seeing in the market may prove this thesis to be wrong.
- Forecasted 2023 transaction volume is bullish compared to 2022 sentiment with 90% of the respondents expecting volume will be at least $100 billion and 53% expecting it to reach over $125 billion. Overallocation issues will not be easily resolved and GPs are continuing to adopt continuation funds in growing numbers; these two factors alone will most certainly drive market volumes once secondary funds are flushed with new cash to invest.
Please contact us should you have any queries or wish to find out more about Campbell Lutyens’ secondary advisory practice. In addition click here for important information regarding the report.
