SecureDocs Blog Private Equity 2023 Mid-Year Recap: A Tough First Half

Venture capital and private equity transactions have fallen dramatically, with North American value and volume down 60% and 35%, respectively. Global year-over-year figures were slightly lower as a result, reflecting both American activity comprising a large portion of the world total and a worldwide slowdown. Financial sponsors are still sitting on over a trillion dollars in dry powder, but headwinds include a tougher regulatory environment, more expensive financing, and a widening gap between buyer and seller.Analysts say the slowdown is due to higher interest rates pushing down valuations as well as a resilient economy, leading buyers to offer lower valuations while sellers are reluctant to sell at those valuations.We expect continued decline in the second half, though likely a much less dramatic fall as we get further away from the gangbuster quarters of yesteryear.2023 is the year of cautious optimism. While economic indicators look better than in 2022, higher rates and uncertainty are putting a damper on investment. Nowhere has that been felt more than in the private equity market, perhaps one of the most sensitive spaces to both sentiment and borrowing costs.