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PitchBook News - The return of the LBO

Plus: Could solar and wind companies take to the seas?, mega-funds propel fundraising, European VCs extend their runways & more
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The Weekend Pitch
July 23, 2023
Presented by DealCloud, by Intapp
(Jenna O'Malley/PitchBook News)
The rust is coming off the gears of private equity's LBO machine.

Leveraged buyouts accounted for 40% of US PE deals in 2008, but PE's bread-and-butter transaction type has given way to alternative strategies like add-on acquisitions and growth-equity deals. By 2022, it had fallen to 19% of total deal count.

But a rebound in bank lending in the second half of 2023, paired with a momentary pause in rising interest rates, recent valuation corrections and heaps of dry powder, could offer a glimmer of hope for PE's hallmark deal type.

This is the Weekend Pitch, and I'm Jessica Hamlin. You can reach me at jessica.hamlin@pitchbook.com or on Twitter @jessicaahamlin.
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DealCloud, by Intapp  
Understanding and preparing for each stage of a venture capital deal
Venture capitalists recognize that finding and executing the right deals is more important to their long-term success than beating rivals to the table. Staying informed and organized is the best way to make the most profitable decisions as a venture capital firm.

Now, more than ever, investors need to revisit the stages of venture capital deals and compare the unique attributes of each stage to their own strategy.

Download this guide to learn how DealCloud enables investors to move more quality deals through their pipeline and make smart decisions that translate to a more profitable future.

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Trivia
VC investors from which country have pulled back sharply from European startups, aiding in the 69% year-over-year drop in deal value?

A) UK
B) US
C) China
D) Canada

Find the answer at the bottom of The Weekend Pitch!
 

Anchors aweigh!

(Rollo Marmion/Shutterstock)
Building solar and wind projects offshore might sound like an extreme solution to NIMBY backlash, but it's actually becoming an increasingly viable model.

Our latest analyst note on floating renewables takes a deep dive into the burgeoning developments in floating renewable energy infrastructure and technology, and answers the question: Could solar and wind companies take to the seas?
 

VCs double down on existing European investments

Follow-on rounds have dominated European venture deal count as investors prioritize ensuring the survival of existing portfolio companies. Some 70% of rounds in the first half of the year were dedicated to follow-on funding, according to PitchBook's Q2 2023 European Venture Report, about the same as last year.

VCs this year have been concentrating on restructuring their portfolio companies' operations and extending their runways to withstand the VC winter that is expected to last throughout the year. With this increased focus on follow-on funding, deal sizes are trending toward the larger size.
 

Increased fundraising a ray of sunshine in European PE

(Beautiful landscape/Shutterstock)
Despite PE deal values falling significantly from last year and overall market activity remaining muted due to macroeconomic factors, there were some glimmers of optimism in PitchBook's Q2 2023 European PE Breakdown.

While exit value is down 31.6% year-on-year, it has risen from the previous quarter by 28.8% to €68 billion (about $75.6 billion), driven largely by mega-exits. Sticking to the mega theme, fundraising was propelled by mega-funds, and it's on track to exceed last year's levels. Further hope was provided by specific countries in the region, with France a standout performer.
 

Quote/Unquote
"Running Alameda doesn't feel like something I'm that comparatively advantaged at or well-suited to do."

—Caroline Ellison, former CEO of Alameda Research, the crypto hedge fund founded by Sam Bankman-Fried, in a 2022 document published this week
 

Recommended Reads
After three deaths, 12,000 layoffs and a series of painful cutbacks, Google's workforce is reckoning with a changed company. [The Information]

People have begun to love Apple Maps, Apple's most hated product. [The Wall Street Journal]

How TV writing became a dead-end job. [The New York Times]
 

Stay tuned
Keep an eye out for these insights and research reports coming out this week:
  • Q2 2023 Global M&A Report
  • Analyst Note: Food-as-Medicine: An Overhyped Concept or the Next Frontier?
 

Trivia
Answer: B)

Lower-risk appetite for cross-border deals, uncertainty around monetary policy and US bank collapses in 2023 have contributed to US VCs' pullback from Europe, according to our Q2 2023 European Venture Report.

This edition of The Weekend Pitch was written by Jessica Hamlin, Emily Burleson, David Stevenson, Leah Hodgson and Rosie Bradbury. It was edited by Heather West, Alec Davis and Laural Hobbes.

Were you forwarded The Weekend Pitch? Sign up at pitchbook.com/subscribe.
 
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