Letter from Hugh MacArthur: There Is No New Normal

This article is part of Bain's 2021 Global Private Equity Report.

Dear Colleague:

What can one say about such an unusual, tumultuous year? Most numbers won’t tell the story. 

Whether you look at the value of deals done, exits accomplished, funds raised or returns generated, you will see data that is generally in line with the past few years’ results. One figure that stood out to me was the number of deals transacted by PE firms, which was down about 1,000 in 2020 from recent levels. That has portents for 2021.

Total investment value last year was supported by ever-larger deals, not more deals. This fact is important because it means many GPs did not get the deals done that they had intended to in 2020. With soaring levels of dry powder, robust credit markets and recovering economies, 2021 deal markets promise to be incredibly busy. The sectors that have proven most resilient to the pandemic are familiar: technology (especially enterprise software), industrial goods (including building products and packaging), financial services (especially fintech and payments) and healthcare (especially services). These four broad sectors accounted for over 65% of all transactions last year and are set to host most of the action in 2021.

In this year’s Global Private Equity Report, we look deeply into several other trends that are changing the PE landscape: the continued rise of ESG/sustainability, how firms are identifying the management and board talent required to successfully execute an investment thesis, the benefits and limits of virtual selling, and what to make of SPACs. Lastly, we peer into our crystal ball to look at evolutionary forces reshaping the PE industry itself and consider what the increasing specialization of firms and products will mean for the future of alpha generation and the classic buyout fund.

We hope you enjoy this year’s report and look forward to gathering again when possible.

  • Acknowledgments

Read our 2021 Global Private Equity Report


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