Inflation and geopolitical uncertainty may have taken away the punch early in the M&A party overall, but how has private equity fared in the ongoing market tumult? While deal values and volumes have fallen slightly in the wider market, financial sponsors continue to fare well. Transactions by value fell a modest 4 percent in 1Q22 versus the same period last year, data from S&P Global Market Intelligence show, and actually rose 6 percent to $99.8 billion in April over the same period last year.

It may be a bit early to call the bottom of the M&A slump, but fund managers have plenty of reasons be optimistic. The slowdown and accompanying rerating of shares public and private may bring buyers back to the table who were previously sidelined by high valuations. Many segments of the lower middle-market remain largely untouched by volatility and continue to transact apace. And to the extent that attractive targets are impacted, choppy capital markets might make sellers more inclined to transact with buyers who will keep their companies private.

Where does today’s heatmap point? The news is particularly good for healthcare and technology, media, and telecom players. Healthcare targets were over twice as likely to secure deals this past April than last year. TMT companies were likewise in demand, constituting the largest slice of the dealmaking pie at $40 billion in value.

Those who find the sudden uptick in PE dealmaking surprising based on transaction activity find some support in recently released figures as well, however. Despite an increase in April deal value, the volume of transactions remains lower than this time last year.

Brandon Zero