Sharing the cutting-edge trends and strategic insights shaping the private equity and venture capital landscape this year, exclusively from the 2024 IPEM conference

By Elizabeth Garforth, Anita Pouplard

With ‘cautious optimism’, the private equity and venture capital industry anticipates a more favorable business environment in 2024, despite prevailing market challenges such as economic slowdowns and geopolitical uncertainties. That understanding came through clearly from our recent attendance at the 10th edition of the IPEM conference in Cannes this past January. Presenting invaluable insights into the current state and future prospects of the industry under the theme "Getting Deals Done," this exclusive gathering brought together over 3000 professionals from the PEVC sector, representing more than 1300 firms across 46 countries.

From seasoned veterans to emerging leaders, the collective wisdom shared at the conference provided a roadmap for navigating the challenges and seizing the opportunities that lie ahead. An especially interesting presentation by Antoine Colson, CEO & Managing Partner of IPEM and Nicolas Beaugrand, Managing Director at Alix Partners shared the insights of the IPEM Private Equity Pan-European survey with 14 European national PE associations.

Here are seven key takeaways from the conference, shedding light on the market outlook for the PE/VC industry:

  1. Improved Business Environment: Despite fluctuations, 44% of General Partners (GPs) express optimism about the business environment in 2024, with 56% anticipating increased exit opportunities.
  2. Fundraising Remains a Challenge: While traditional Limited Partners (LP) are reducing their allocations for private equity (-32% for banks, - 8% for insurance companies), GPs are exploring new sources of capital, including family offices, retail investors, and foundations. Additionally, there is a notable increase in LP interest from the Middle East and Asia  (21% net increase) and to a lesser extent from North America (17% net increase). Within Europe, 83% of GPs consider the European PE industry to be LP led rather than GP led.
  3. Exit Strategy Innovation: Corporate acquisition is seen as the top exit opportunity overall, but in order to return cash, GPs are looking into more creative exits such as partial exits or secondary funds / mergers.
  4. Emphasis on Direct Deal Flow: GPs are increasingly pursuing proprietary deal flow by directly engaging with CEOs and business owners, bypassing intermediaries to source new opportunities.
  5. Focus on Value Creation: Priorities are shifting from leverage to value creation, with a focus on operational efficiency, higher ESG standards, and talent management. Notably, ESG diligence failure has caused a significant percentage of deal terminations.
  6. Sectoral Shifts: Healthcare and Pharma emerge as preferred sectors for buyout deals followed by IT/Tech and Industrial/Business Services; AI & Data, Health/Medtech, and Clean/Greentech lead in venture and growth investments. The tech and software industry is shifting towards deep tech projects such as Generative AI and space exploration. Traditional application solutions are becoming less prominent, while the Fintech sector faces challenges. The infrastructure sector anticipates a concentrated market focus on energy infrastructure and long-term assets. There is a focus on investments in decarbonization, digitalization, aging infrastructure & security of supply (critical materials/materials). Portfolio companies are achieving growth by prioritizing digital transformation to meet their value creation objectives.
  7. Consolidation in the Industry: Private equity and venture capital firms are undergoing a consolidation phase to maintain market position amid funding challenges. While many companies have had to abandon development projects due to lack of new funding, the entire financing chain is now being affected. In order to maintain their market position, PE and VC firms will have no choice but to merge. This trend is expected to continue over the coming months.

In summary, the insights shared at the IPEM conference shed light on the intricate PE/VC industry in 2024. From cautious optimism amid market challenges to the emphasis on innovation and value creation, these key takeaways underscore the industry's resilience and adaptability. As firms navigate evolving dynamics and embrace strategic shifts, they are well-positioned to capitalize on opportunities and drive meaningful outcomes in the year ahead and beyond.

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