Private equity firms around the world entered 2024 with record levels of capital available to deploy, totalling US$2.59 trillion at the end of last year, according to S&P Global Market Intelligence. Even within Australia, unallocated private equity capital has more than tripled between 2016 to 2023, according to McKinsey.

Eventually, this dry powder is expected to ignite. Private equity firms are recyclers of capital, not mere storers. There comes a point when deals must start flowing again. The pressure to initiate deals will only increase as limited partners look for quicker returns to meet their own need for liquidity.

Against this backdrop, 2024 could be a tipping point. The early signs are promising, albeit tempered by strategic caution, especially in the mid-market segment.

Recently, ION Analytics highlighted significant interest from global dealmakers in expanding their investments in Australia’s mid-market. This segment’s appeal lies in its often more stable growth than early-stage businesses, while benefiting from innovations at the forefront of new technologies and renewable energy.

As the momentum in the market continues to accelerate, it is anticipated that both businesses and equity firms will increase their appetite for investment.

However, not all will be the same. There has been a notable shift toward more discreet, bilateral negotiations over broad, competitive auctions, as businesses seek to gauge investors interest before launching into a formal process.