Private Equity Firms Shift Focus to Sales in 2024: Navigating Changing Markets and Regulations

The year 2024 has seen many of the world’s private equity firms, such as Thoma Bravo and Permira, shift gears into a “sell now, buy later” mode. This decision is largely attributed to these firms aiming to return money to investors after a particularly challenging period concerning exiting holdings. Consequently, the sales of their portfolio companies have taken a higher precedence in their early 2024 agenda. This trend is well-illustrated by Thoma Bravo, with managing partner Holden Spaht noting an increase in related discussions and underlining the need for firms to undertake asset sales.

As he explains, “There is certainly more talk, more conversations, with the realization that firms need to sell assets… If you want to get a deal done in the first half, you had better be starting conversations with buyers in February.”

This increased focus on sales is particularly timely as we head towards the election period, with many sponsors looking towards executing smooth exits in readiness for the possible regulatory changes that can accompany political shifts. While this strategy is not without risks, including potential tax implications, it illustrates a nimble approach that is keenly aware of the financial and economic cycles at play.

These private equity firms, despite having considerable liquidity (“cash to burn”), first want to focus on generating returns. This strategic focus marks a significant shift in these firms’ usual operating method and foretells potential changes within the private equity landscape.