View all insights
image

CEPRES Private Capital Market Outlook Q2 2019

The fundraising activity coincides with the overall increase in US buyout entry EBITDA pricing multiples that have breached 11x in the median case which far exceeds the 9x median in 2007, and as the positive economic cycle continues into beyond the ten-year mark, so is US buyout fundraising and investment activity.

European buyout deal pricing is also trending upwards with the 11x median also surpassing the 10x median in 2007. Second-quarter venture capital fundraising in Europe also showed robust growth QoQ and YoY albeit still at a much lower level compared to the US.

Our latest transaction analysis illustrates the dispersion in valuation multiples paid for diverse business models. Large amounts of buyout capital are currently focused on businesses with strong revenue growth driven by technological transformation. This is driving up valuations in these segments compared to traditional sectors and businesses unable to leverage technology to drive improved revenue or margins. The massively uncorrelated scalability of revenues leveraging new technologies, generally justifies the increased valuations being paid for these innovative business models and relative pricing is still balanced in a macro sentiment that currently faces a high systematic risk.

Dr. Daniel Schmidt, Founder & CEO, CEPRES

Fund performance
Market performance

Read next

image

Cash Pacing: Macro and Market Headwinds Create Headaches for LPs

Limited partners (LPs) now see private market funds as central to their investment strategies, driven by a need for diversification and strong return potential. The long-term appeal of private markets, especially private equity, remains strong, with allocations expected to grow. However, rising interest rates have increased borrowing costs, challenging debt-driven returns and lowering potential exit values. Consequently, the relative appeal of private markets may seem reduced as the risk-free rate rises.

image

Private Markets Rebound: Why Effective Due Diligence is Mission Critical

After two years of stagnation, private investors (LPs) are eager to deploy new capital. Activity is rising, but in today’s volatile market, disciplined due diligence is vital. Selecting the right General Partner (GP) and understanding their return strategies across economic cycles are more critical than ever.

Dive into our whitepaper to strengthen your investment approach and ensure you navigate these challenges successfully.

image

Private Equity Asset Allocation Models: Why High-Quality Data is Paramount

Private equity asset allocation models are sophisticated frameworks used by investors to strategically distribute their capital across different types of assets within the private equity universe. Asset allocation decisions involve determining the appropriate mix of investments across various asset classes, such as venture capital, growth equity, and buyouts, as well as considering factors like industry focus, geographic allocation, fund type, risk management strategies, and liquidity considerations.

Client Exclusives

Private credit: Spotlight on deals — the winners and losers & bounce back from the crisis

Read more
image

Navigating Private Debt: A Deep Dive into Historical Risk and Returns

Read more
image