Private Equity in 2023: Valuations Recover and Fund-Raising Soars

Private equity activity remained sluggish in the first half of 2023 due to ongoing macro uncertainty, resulting in limited investments, exits, and fund-raising. The industry is under pressure to find ways to return more capital to limited partners, with top funds reviewing portfolios and resetting value creation plans to get things moving again. The IPO window has opened slightly, inflation is moderating, and banks are cleaning up their balance sheets, providing some optimism. However, the industry faces a liquidity crunch with a record $2.8 trillion in unexited assets, leading to a decline in fund-raising. The focus now is on increasing distributions to LPs through exits, GP-led secondaries, and other liquidity solutions.