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In today's Daily Pitch, you'll find: - The era of large take-private PE deals is waning as market conditions turn sour.
- Investors were hoping that startups could grow into their sky-high valuations, but even those with lots of runway may struggle to catch up.
- A look at five charts that showcase how European VC performed in 2022.
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| Why PE's take-private joyride is downshifting | |  | | (ANGHI/Shutterstock) | | | Buying a public company on the cheap has been a popular strategy for private equity firms in the past two years.
Buyout firms spent a record $195.1 billion to acquire US public companies in 2022, PitchBook data shows. Several transactions fetched a valuation at or above $10 billion, with the average take-private coming in at $4.15 billion.
However, with favorable market conditions—including an easy fundraising market and the availability of cheap debt—enjoyed by PE funds falling away, dealmakers are souring on large take-privates and favoring smaller transactions instead. | | | | | | | | | Even startups with runway probably can't grow into sky-high valuations | |  | | (heychli/Shutterstock) | | | Valuation multiples may have fallen too far from their 2021 peaks for many late-stage companies to catch up to their last price as quickly as investors initially hoped, according to Pitchbook calculations using data from VC firm IVP.
The median valuation for late-stage SaaS deals has expanded more than seven times between 2017 and 2021, IVP data shows. But in recent months, that multiple seems to be reverting back to 2017 levels.
Our analysis finds that even startups that are growing healthily and have a couple of years of runway left are likely on course for a down round. | | | | | | | |
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| Return to Normal: Resilience and Resetting | | With year-end M&A numbers coming in, it appears that 2022 was a more resilient year than expected. But momentum has declined in recent months, and 2023 begins with less momentum—and more headwinds—than a year ago. But investors and strategic buyers have faced headwinds before, and silver linings remain abundant in 2023.
In partnership with PitchBook, Litera has released Return to Normal: Resilience and Resetting. The report includes trends in global M&A and private equity transactions, valuations, cross-border transactions, and payment types. It also includes an interview with global law firm Goodwin Procter, with insights on deal de-risking, adaptations and technology for due diligence, and aspects of dealmaking that will see resetting in 2023.
To download the report, click here | | | | | | | |
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| 5 charts showcasing European VC trends in 2022 | |  | | (Markus Pfaff/Shutterstock) | | | European venture capital dealmaking, exits and fundraising in 2022 fell short of previous records as global economic headwinds caused a slowdown.
Take a look at these five charts for a closer look at how the asset class performed in 2022. | | | | | | | | | Tranch's $100M round signals VCs shift to BNPL for business | |  | Tranch co-founders Philip Kelvin and Beau Allison
(Courtesy of Tranch) | | | Buy now, pay later startup Tranch has secured $100 million in equity and debt.
The BNPL space has seen a significant fall in venture funding since its peak in 2021, but investors are predicting more resilience on the B2B side. | | | | | | | | | | Carolynn Levy shares how she wrote the five-page document that underpins much of early-stage venture capital today. [Meridian]
Replacing street parking with bike lanes can be quite good for business. Will store owners believe it? [Wired]
How SEC scrutiny is blocking some crypto companies from going public. [The Wall Street Journal] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 474 Deals | 1935 People | 506 Companies | 16 Funds | | | | | | |
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| 2015 Vintage Global Debt Funds | | | | | | |
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| Quantum computing startup Pasqal nets $109M | | | Pasqal, a Paris-based developer of programmable quantum simulators and computers, has raised €100 million (about $109 million) for its Series B. Singapore's Temasek led the round. | | | | | | | DailyPay raise tops $260M | | | | | | | | | | | | | | | Cygnvs gets $55M led by a16z | | | Cyber-crisis management platform provider Cygnvs has launched from stealth with a $55 million Series A led by Andreessen Horowitz. | | | | | | | | | | | | |
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| Don't miss our upcoming webinar | | Join PitchBook in examining the EU's new Sustainable Financial Disclosure Regulation, which will require private market investors to disclose ESG performance starting in June 2023. A panel of ESG experts will provide an overview of the requirements and how they will affect investors and portfolio companies. Key topics include: - What is SFDR (SDR-, UK- and their related disclosure requirements), and who will be most affected by its conditions?
- What are the differences between SFDR Articles 6, 8 and 9? What are the implications of nonadherence and avenues of collecting data to become compliant?
- What is the burden on portfolio companies? How long is the process of becoming compliant?
Register now to secure your spot. | | | | | | | |
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| Castlelake partners with Peregrine Energy Solutions | | | | | | | | Providence Equity acquires Times Square billboard lease | | | Providence Equity Partners has acquired a decadeslong lease for nine Times Square billboards from Universal Branding Group. The PE firm has also arranged for Outfront Media, one of its portfolio companies, to operate the New York City billboards. | | | | | | | OGCI investing arm takes stake in CL-Invest | | | OGCI Climate Investments, a division of the Oil and Gas Climate Initiative, has invested in CL-Invest, a Norway-based company that works with oil companies to lower methane emissions and, in turn, create carbon credits. | | | | | | | Eir Partners acquires ReviveHealth, SwiftMD | | | | | | | | Thoma Bravo, Vista, Francisco eye Sumo Logic for LBO | | | Software company Sumo Logic has been courted by PE firms including Thoma Bravo, Vista Equity Partners and Francisco Partners, The Information reported. Sumo Logic held its IPO on the Nasdaq in 2020, raising $325 million. Its estimated post-IPO valuation was $2.17 billion, according to the PitchBook Platform. | | | | | |
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| EnCap's Advance Energy to sell portfolio for $1.6B | | | | | | | | Blackstone-backed Resolution Life attracts $1B investment | | | Nippon Life Insurance Company has agreed to invest $1 billion in Resolution Life, an insurance company operating in the US, the UK, Bermuda, New Zealand and Australia that raised $500 million from Blackstone in October. Nippon previously invested $650 million in Resolution. | | | | | | | Mattress maker Serta Simmons files for Chapter 11 protection | | | Serta Simmons has filed for Chapter 11 bankruptcy protection in an effort to cut back its debt by $1.6 billion and end litigation with some of its creditors, Bloomberg reported. Lenders including Angelo Gordon and Apollo Global Management sued the mattress maker over an earlier restructuring plan. | | | | | |
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| Cowboy Ventures closes $260M across two funds | | | Cowboy Ventures has raised $260 million across two new funds, TechCrunch reported. The firm raised $140 million for its fourth flagship fund, while its first opportunity vehicle garnered $120 million. | | | | | |
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| Henry Kravis among group investing $175M in Thrive Capital | | | | | | |
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