This year should combine both commercial opportunities and regulatory risks for private equity. Deal multiples are high and will probably stabilize or continue to go a little higher given the combined effect of a scarcity of sellers in the market and money continuing to flow into private equity. While 2020 was strong, particularly the second half, many funds focused on managing their portfolio companies through the pandemic rather than going to market. We expect this to change in 2021, certainly for those companies that weathered the uncertainty and challenges that 2020 brought. While clearly some industries (such as travel, hospitality, and retail) are still down, many have a clearer path forward and can demonstrate how they came through 2020 stronger and more resilient than before. Thus, there should be a greater number of investment opportunities this year, particularly in the middle market, as private equity funds look to monetize investments and public companies look to sell non-core assets. Meanwhile, U.S. funds should expect stricter tax and antitrust implementation from the new administration.

Here’s what we think you can expect this year, and how these changes might impact your fund or your business.