Private equity firms will face additional pressure to sell assets and return capital to investors after two years of sluggish dealmaking, according to a senior executive at Evercore Inc.

The global value of mergers and acquisitions and related transactions fell below US$3 trillion last year for the first time since 2013, according to data compiled by Bloomberg. Private equity funds were less active as a sharp rise in interest rates made financing deals more expensive and raised the odds of a recession.

The deal slump has been exacerbated by a persistent gap in expectations — sellers want higher prices than buyers are willing to pay, Andrew MacNiven, Evercore’s head of Canada, said in an interview. Many private equity owners have chosen to hold assets for longer, rather than exit at what they perceive as a depressed price. 

But a number of factors are opening the path for more deals, MacNiven said. “There are a lot of privately owned assets and private equity assets where the owners would like to sell,” he said. Companies in many industries “are well-positioned to buy” and credit markets have suddenly improved, with bond yields falling during the late 2023 bond rally. 

And limited partners — the pension funds and other investors that are private equity firms’ customers — may be eager to see more cash coming back. 

“After a couple of slower years, the fund life starts to become a focus,” MacNiven added. 

There were only two private equity-led deals with values of more than $10 billion involving Canadian firms last year, data compiled by Bloomberg show. The largest was Brookfield Infrastructure Corp.’s acquisition of Triton International Ltd., an owner and lessor of intermodal containers. Canada Pension Plan Investment Board teamed up with tech-focused investment firm Silver Lake to take private software company Qualtrics International Inc. 

Toronto-based Brookfield Business Partners LP was also involved in the largest completed sale involving a Canadian private equity firm in 2023, when it closed the transfer of nuclear-services firm Westinghouse Electric to buyers including Cameo Corp. and Brookfield’s renewable energy arm.

Evercore had an active year in Canadian M&A, playing roles in giving advice to Onex Corp. on its acquisition of specialty insurance company Accredited and Public Sector Pension Investment Board on its $3 billion deal for Radius Global Infrastructure. PSP joined with Sweden’s EQT AB on that purchase. 

MacNiven joined Evercore’s office in Toronto in 2019 after spending more than 15 years in Royal Bank of Canada’s investment banking business. The office, which opened in 2012, currently has about a dozen employees, including George Estey, chairman of the Canadian advisory business.

Shareholder activist situations are becoming a bigger part of Evercore’s business in Canada, MacNiven said; the firm works with boards to help them understand how to handle inquiries and demands from investors, MacNiven said.