Just how hot is private equity’s share of the ongoing dealmaking boom? A look at a recent data trove shows the extent to which the unprecedented M&A surge is remaking the year’s prospects, and offers at least some indication that the first quarter’s merger enthusiasm has begun to ebb for financial sponsors. Monroe Capital CEO and president Ted Koenig talks to Mergers & Acquisitions about the boom.

“The market is very hot. M&A is about as active as I have seen it in the last 20 years,” explains Koenig. “Investment banks are busy with M&A sale processes and private credit firms like Monroe Capital are busy financing much of this deal activity.  We expect 2021 to set all types of records for deal activity.”

Exhibit A is the value of private equity transactions announced through H1. So far this year, sponsors have already written checks that dwarf previous sums spent in all of 2020 and 2017 according to S&P Global Market Intelligence data.

Tellingly, Q2 transaction value and volume was lower than Q1, potentially pointing to a lingering side effect of the pandemic. Fund managers sitting on quality assets chose to wait out Covid-related uncertainty, exiting certain vintages en masse once the cloud had lifted.

“It is being driven in part, by a return to business from Covid, as well as a robust economy in many industry segments,” Koenig elaborates. “PE firms are both actively buying and selling companies and creating realizations for their funds.”

Whether conglomerates and sponsors have cleared their exit pipelines yet or not, there are strong catalysts for continued dealmaking. Special purpose acquisition vehicles activity has slowed, true, but they are still sitting on a massive trove of capital waiting for deployment.

Financial sponsors are also raising record sums. The party looks set to continue!