Good morning, Hubsters. MK Flynn here in New York with the US edition of the Wire.
Today, we’re taking a sobering look at the current environment for dealmaking in the US.
In more upbeat news, I’m sharing an update on One Equity Partners, based on a January LP communication obtained by PE Hub and a recent SEC filing.
And we’re featuring my thought leader Q&A on energy investing with Neil McMahon, a managing partner at Kimmeridge. McMahon will be a featured speaker at PEI Group’s upcoming NEXUS 2025 summit in Orlando, Florida, March 10-12.
First, the bad news.
M&A stalled in January
At the end of last year, dealmakers brimmed with optimism, predicting 2025 would be a great year for M&A. Momentum was strong heading into the new year. Every quarter in 2024 was better than the last, according to data provided by S&P Global, as PEI Group’s senior data journalist Rashida Kamal wrote about in PE Hub’s Q4 2024 Deals report.
2025 would begin with favorable conditions, dealmakers predicted back in December. They cited plenty of dry powder, increasing alignment between buyers and sellers, lowering interest rates and an incoming administration likely to deliver tax and regulatory policies more friendly to private equity and M&A.
But instead, the first month of the year delivered the slowest start for US dealmaking in more than a decade, according to data PE Hub analyzed from multiple providers.
January saw just 894 US deals, down nearly 26 percent from 1,201 the previous January, according to LSEG. Total deal value dropped about 17 percent.
Increasingly, private equity pros are telling PE Hub that they are hesitating, as they try to discern which direction the new administration is heading on a wide range of issues, from tariffs to carried interest.
“Uncertainty” is a word we’re hearing a lot – and it’s one dealmakers loathe.
Transaction pros “have to hit the pause button because now there’s uncertainty,” Karl Roberts, managing director at business advisory firm Portage Point Partners, told PE Hub’s Rafael Canton in a recent conversation.
How do you think the year is going so far? What impact is the new administration having on your dealmaking activities? What’s your current outlook for M&A in 2025? Reach out to me with your thoughts at mk.flynn@pei.group
OEP delivers strong realization activity
While One Equity Partners declined to comment for this report, details on the firm’s performance emerged in a January LP communication obtained by PE Hub.
Outside of the LP communication,we noticed that on January 31, the firm filed a Form D with the SEC, indicating it has raised approximately $2.4 billion in a second close for OEP IX. The firm is reportedly seeking $2.75 billion for the vehicle.
Upgrade to the premium version of the Wire to learn all the details, including distributions across across OEP VI-VII and how the firm is investing OEP IX.
Energy consumption rising
PE Hub’s series of thought leader Q&As continues today with Neil McMahon, managing partner, at New York energy investor Kimmeridge.
Serving as a managing partner, McMahon is responsible for developing Kimmeridge’s screening capabilities. Previously, he was a senior equity research analyst for the global integrated oils at Sanford C Bernstein.
McMahon will be a featured speaker at PEI Group’s upcoming NEXUS 2025 summit in Orlando, Florida, March 10-12.
Upgrade to the premium version to read the interview.
For more of what to expect at NEXUS 2025, check out my recent conversation with Thoma Bravo’s Orlando Bravo, about investing in technology companies. Also see Craig McGlashan’s conversation with Xavier Robert, partner and chief investment officer at Bridgepoint.
That’s it for today. Next Monday, I’ll be on vacation, and PE Hub’s Rafael Canton will fill in for me on the US Wire.
In the meantime, tomorrow, Craig McGlashan will bring you the Europe Wire, and Obey Martin Manayiti will bring you the US edition.
All the best,
MK
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