As extraordinary and resilient as the post-Covid rally in global private equity proved to be, it was
ultimately no match for the Fed.
For the first six months of 2022, the industry extended 2021’s record-shattering burst of deal activity,
despite persistent inflation, the invasion of Ukraine, and growing tensions with China. Then, in June,
when US central bankers issued the first in a series of three-quarter-point interest rate hikes—and their
colleagues around the world followed suit—banks pulled back from funding leveraged transactions
and dealmaking fell off a cliff, pulling exit and fund-raising totals down with it (see Figure 1).
Given the heights from which they fell, buyout deal value ($654 billion), exits ($565 billion), and
fund-raising ($347 billion) all finished 2022 with respectable totals in a historical context (see Figure 2).
But the sudden reversal marked the end of an up cycle that has endured (with a brief Covid brake tap)
since 2010, when the industry emerged from the global financial crisis and produced a 12-year run of
stunning performance.