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Welcome to the Verus Private Equity Outlook 
summary.

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Our main area of focus is on the impact of a higher-rate-for-longer scenario on the asset class.

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We also examine how the rising rate environment has affected private markets so far.

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Private Equity deal activity remains weak in the face of rising interest rates.

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Private Equity valuations fell due to a multitude of factors,

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deterring Private Equity sellers from transacting.

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Until a more stable environment has been established, deal activity will likely remain subdued.

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In many cases, with the cost of debt rising, the proportion of equity has also risen.

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Exit activity is down a considerable margin year-over-year.

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Sponsors are opting to retain their portfolio companies instead of selling them at less-favorable prices.

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Public listings were closed due to the decline in public equities and risk premiums in 2022,

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but upcoming IPOs and market rebound could lead to increased  IPO activity.

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A higher rate rate for longer scenario may benefit prospective investors. 

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Deal activity may pick up alongside motivations borne out of stress and liquidity needs. 

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Investors may find opportunities in stressed situations.

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Buyers will have leverage to push for friendlier deal terms and may benefit from discounted purchase prices.

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We expect distressed opportunities to increase, but not to the level of prior market downturns.

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With decreasing premiums on risk, there are reduced inflows to private equities.

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With higher returns on fixed income assets, the risk-return premium of Private Equity has become less attractive.

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Fundraising has decreased across most of U.S. Private Equity and Venture Capital, especially in the late-stage.

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General Partners who remain active may find less-competitive markets to be beneficial.

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Liquidity needs may result in an uptick of alternatives to full monetization events.

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Fundraising difficulties have caused General Partners to lean into alternative avenues

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of generating liquid for their existing LP base, one being continuation vehicles.

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Secondary investors may benefit from persisting capital overhang that may widen with increasing supply.

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The execution of minority sales may also increase for GPs who desire to prolong their ownership

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in anticipation of a more favorable exit environment.

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Thank you for listening.

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Read our full Private Equity Outlook at verusinvestments.com/research.