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Also: Rate cuts give new hope to VC, middle-market dealmaking signals a revival & more
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The Weekend Pitch
September 22, 2024
The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data
(Jenna O’Malley/PitchBook News)
The Federal Reserve’s sharper-than-expected move to slash its interest rate target by 50 basis points has most private market pros dancing in the streets.

They point to the significantly reduced cost of capital that benefits dealmakers of all stripes. Private credit firms, meanwhile, will be forced to adjust credit lines and loan terms to remain competitive.

I'm Michael Bodley, and this is The Weekend Pitch. You can reach me at michael.bodley@pitchbook.com or on X @ michael_bodley

While there’s reason for renewed optimism—perhaps no more so than a projected uptick in exit markets—private investors may not want to pop the champagne just yet.

That’s because the Fed’s sudden shift, orchestrated by Chairman Jerome Powell, is primed to take longer to impact opaque alternative assets than public ones.
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Trivia
OpenAI released its newest model this week, focused on enhanced reasoning capabilities. Investors are excited about the technological potentialities and competition that these new complex models may bring. What was the fruity codename given to OpenAI’s o1 reasoning model?

A) Blueberry
B) Orange
C) Strawberry
D) Kiwi

Find your answer at the bottom of The Weekend Pitch!

With US Fed's rate cut,
new hope dawns for VC
(Jayk7/Getty Images)
VCs took a collective sigh of relief this week—the US Federal Reserve's half-point interest rate cut has given them a beacon of hope. Investors anticipate the new easing era will kick-start what has so far been a sluggish recovery and spin the capital flywheel.

Our latest Quantitative Perspectives report covers how the rate cut has the potential to break open the IPO window, accelerate VC fund returns and improve loss ratios across stages. For LPs, closely evaluating managers for early DPI and diversifying across vintage years will be essential.
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Middle-market deals spark
revival for private equity
(Tippapatt/Getty Images)
Our latest US PE Middle Market Report highlights that buyout dealmaking gained traction in the first half of 2024—with middle-market deal value rising 12%, versus about 5% for the broader PE market.

The report also spotlights a change in key metrics, suggesting better times may lie ahead for PE. After a historic rally, small-cap public equities have closed the gap to large-cap companies and deal multiples for middle-market businesses are rebounding.
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Quote/Unquote
Federal Reserve Chairman Jerome Powell
(Andrew Harnik/Getty Images)
“We now see the risks to achieving our employment and inflation goals as roughly in balance, and we are attentive to the risks to both sides of our dual mandate.”

—Federal Reserve Chairman Jerome Powell speaking at a press conference announcing the decision to cut interest rates by .50 points. You can read more about the potential impact on M&A activity here.
 

Stay tuned
Keep an eye out for these insights and research reports coming out this week:
  • 2024 Digital Health Overview
  • Q2 2024 AI & ML Report
  • H1 2024 Global Private Debt Report
  • Q2 2024 Data Analytics
  • Q2 Digital Health Report
  • 2024 Sustainable Investment Report
 

Trivia
Answer: C.

OpenAI’s enhanced reasoning model was reportedly codenamed Strawberry. You can read more about the newly emerging AI battlefield investors are bullish on here.

This edition of The Weekend Pitch was written by Jacob Robbins and Nadine Manske. It was edited by James Thorne and Ron Prichard.

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