The private equity industry will face many challenges in 2016. Despite the hype about 2015’s being a record year for announced mega deals, in the middle market, M&A slowed down, producing fewer completed deals than the previous year. In December, our Mid-Market M&A Conditions Index (MACI) dipped into contraction territory for the first time since Mergers & Acquisitions began our monthly polls in the fall of 2013.
In 2016, traditional PE firms will face even more competition, not only from each other but also from investment firms that embrace aspects of the PE model but skip the fees and fundraising strategies. Among these alternative firms are independent sponsors, which conduct transactions on a deal-by-deal basis, as we wrote about in our December issue.