Clearwater Multiples Heatmap: PE activity holds up amid war, inflation woes

Unquote team
13 June 2022

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Russiaтs invasion of Ukraine, surging energy prices and supply chain disruption combined to create an exceptionally challenging environment for dealmakers in Q1 2022, the latest Clearwater Multiples Heatmap shows.

While these upheavals resulted in some transactions being delayed, PE activity overall continued apace with a wave of TMT, industrials & chemicals, and consumer transactions helping to lift quarterly volumes. Total deal value was down by 16% quarter-on-quarter to EUR 63.4bn – although, to put this in context, the value achieved in Q4 2021 (EUR 75.5bn) was the highest on record. Q1's figures are strong by any conventional yardstick and far above the average of recent years.

Record levels of dry powder continue to bolster the resilience of the buyout market. Indeed, ample liquidity was one reason why PE dealmaking fared better than the wider M&A market, which saw declines in both volume and value.

Turning to specific industries, financial services achieved the highest LTM deal multiple ever seen in any sector in Q1 – thanks in large part to the PE-backed acquisition of UK-based specialist insurance provider CFC. TMT's seemingly unstoppable rise continued in Q1 with the sector's LTM deal multiple climbing for the sixth consecutive quarter.

Healthcare's LTM deal multiple eased back in Q1 2022 following a prolonged period of strong and consistent rises, suggesting that assets in this much sought-after sector could be trending towards more rational valuations.

Click here to download the Q1 Multiples Heatmap report, including:

Detailed breakdowns of deal activity trends for Q1 2022
Quarterly transaction value and volume movements across the past six quarters
Qualitative deep-dives on the Healthcare sector and the near-term outlook for PEs in Southern Europe