View all insights

Despite Macro Headwinds, CEPRES Expects Private Equity Valuations to Hold Up in 2023

Dr. Daniel Schmidt, Founder & CEO, CEPRES

(November 29, 2022) Over the past four years, private market investors have confronted three significant macro shock events — the COVID-19 pandemic, the war in Ukraine and 40-year inflation highs. As the market faces intersecting headwinds of geopolitical instability, inflation and volatility, CEPRES evaluated how asset owners are managing their holdings.

Based on CEPRES’s proprietary deal-level data on 108,000 PE-backed assets across more than 11,000 funds, representing $44.5 trillion in asset value, CEPRES found two key trends — decelerating exits and valuation fluctuation.

Fig 1. Cash exits Q1 2021 – Q3 2022

Cash exits Q1 2021 – Q3 2022

The decline in total exits over the 18 months suggests that asset owners are holding assets and waiting for more favorable exit conditions. Based on proprietary CEPRES data and conversations with some of the thousands of asset owners who contribute data to CEPRES, we expect up to a 50% decline in cash exits in Q4 2022.

Fig 2. Enterprise value markup and markdowns by asset owners — quarter to quarter Q3 2019 – Q2 – 2022

Enterprise value markup and markdowns by asset owners — quarter to quarter Q3 2019 – Q2 – 2022

At the start of the COVID-19 pandemic in 2020, we saw asset owners aggressively mark down holdings. As worries began to abet and the recovery ensued, we saw asset owners aggressively mark up assets in 2021. This valuation markup aligned with significant public market growth — the S&P 500 gained 26.9%, and the Nasdaq gained 21.4% in 2021. With the war in Ukraine, inflation, supply chain issues, a potential recession and other headwinds, we see markups decelerating and markdowns slightly increasing. However, we expect overall valuations to remain steady through the beginning of 2023. 

The illiquidity of the asset class and the lack of daily market-to-market valuations primarily drive this classical effect of stale prices. Valuations measured that can act as transaction comps are only those of active transactions during the downturn. Today, managers are exiting companies that still have sustainable valuations. However, they avoid exiting deals where valuations face pressure and instead shift those into the exit year, hoping for a general market recovery. Therefore, private markets usually react with a year delay on general market valuation movements. If public markets do not recover until Q3 2023, a larger group of managers will have to sell companies for reduced valuations, driving lower general market sentiment.


Asset owners have begun to prepare for a potential recession in 2023. Amid numerous macro shock events, asset owners hold assets longer to better time exits. Yet despite these macro events, we expect valuations to remain steady through the beginning of 2023.

CEPRES Predictive Intelligence is an intelligent AI-based multi-factor portfolio simulation and management solution that incorporates the future developments of single funds based on a unique forecasting technology for illiquid asset classes. CEPRES Predictive Intelligence enables investors and risk managers to measure future uncertainties and optimize asset allocations for any market condition. With just one click, run true Monte Carlo Simulations that create 100,000 scenarios based on more than 107,000 cashflows, P&Ls and operating company metrics from PE-backed companies.

To learn more about how CEPRES data and solutions help unlock alpha and minimize risk, reach out today.

Fund of funds
Fund performance
General partners
Generating alpha
Investing trends
Investment data
Limited partners
Market performance
Market research
Portfolio forecasting
Placement agents
Portfolio insights
Portfolio management
Portfolio monitoring

Read next


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.


Benedikt Hoefelmayr interviewed at BAI AIC 2024

Watch Benedikt Hoefelmayr's full interview at BAI AIC on Private Equity Liquidity Management in times of ELTIF2.


Whitepaper | Private Markets Look-through Data

In an era of political and macro-economic uncertainty, access to granular and accurate knowledge on investments is critical to meet portfolio challenges and goals. With accurate investment data, rather than guessing, you can unearth deeper insights, detect risk patterns, and uncover opportunities that elude those using only basic financial reports.

Download our whitepaper as we navigate the complexities of today's political and macro-economic uncertainty.

Client Exclusives

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

Read more

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

Read more