STAFFING M&A TRANSACTIONS

Hiring Tools

Workforce Management

HRIS Payroll Learning

Wellness

Compensation and Benefits

Employee Engagement

Leadership Development

Sourcing

Performance Management

Assessments

Pre-Employment Screening

Onboarding

Healthcare Staffing

Talent Analytics

Applicant Tracking

Rewards and Recognition

Recruitment Marketing

Video Interviewing

Sources: PitchBook, HRTECHFeed

EARLY-STAGE VENTURE CAPITAL

Sources: PitchBook, HRTECHFeed

LATE-STAGE VENTURE CAPITAL

PRIVATE EQUITY GROWTH / EXPANSION

Harbor View surveyed more than 50 lower middle-market private equity firms to gain insight into their expectations for 2023. Despite a tightening of credit markets and increased volatility of the macroeconomic environment, private equity buyers remain eager to invest in the right opportunities with a focus on profitability and stability While larger deals are more impacted by the credit market volatility, the appetite for lower middle market deals remains consistent as buyers still have sufficient capital to deploy.

How do you expect your strategy might change in 2023?

Dynamic market conditions have prompted investors to re-evaluate their capital deployment strategy. This includes shifting investments to more resilient industries and/or slowing down deployment altogether. We expect that the relative lower valuations and tighter credit markets will result in more add-on acquisitions to lower the average multiple across a platform.

What do you foresee being the largest challenge to closing deals in 2023?

Buyers are taking a more conservative approach to evaluating investment opportunities. While lower-middle market deal appetite remains solid, investors cited concerns of high-quality asset availability. Investors also expressed concerns that seller expectations have lagged the market correction.

How would you describe the current capital raising environment relative to recent years?

Fueled by uncertainty surrounding macroeconomic conditions, private equity firms may delay raising new funds or take longer to gain LP commitments.

In 2023, what is your expectation for valuation compared to 2022?

Unsustainable 2021 valuations have returned to more normalized levels amidst credit market tightening and macroeconomic concerns. Buyers still have ample capital to deploy, however, there is lower deal flow activity creating scarcity value for high quality deals in the current market.