Actionable Ideas for Companies and Sponsors

Go-Private Opportunities on the Horizon When Markets Stabilize

Few companies or sectors have been spared by the prolonged contraction and volatility in public equities. Once record M&A activity has slowed too amid sustained economic and geopolitical uncertainty. But private equity players may soon find significant opportunities to take public companies private, particularly in economically resilient sectors.

While corporate boards are often reluctant to consider selling with a weakened stock price, we expect more of them, especially those in the technology sector, to be more open to strategic alternatives because:

  1. Private equity demand for technology companies is still outstripping market supply
  2. Many technology sub-verticals can thrive even amid slowing or falling economic growth
  3. Direct lending is still available even as the syndicated and high yield market have weakened
  4. Tech stock prices have experienced large declines, potentially spurring more transactions

In fact, this trend is already unfolding as global go-privates have increased each month since the beginning of 2022, with 30 deals, exceeding $150billion, announced in April and May alone. Leading the way are Blackstone, KKR and Thoma Bravo, which have done half of this year’s go-private deals, spanning several sectors, and representing over $118 billion in combined enterprise value. Among the most notable:

  • KKR’s May acquisition of U.K. power generator ContourGlobal for $6.1 billion
  • Blackstone’s April acquisition of student housing developer and operator American Campus Communities for $12.8 billion
  • Thoma Bravo’s March acquisition of business software company Anaplan for $10.3 billion

We expect go-private activity to accelerate later in 2022 as stock prices and the broader economic picture stabilize.