On the latest episode of The Deal’s Behind the Buyouts podcast, Macquarie Capital global head of financial sponsors Tom Amster details his expectations for private equity dealmaking in the coming months following a muted 2023.

Sponsor-led investments and exits will hit a “tipping point” in 2024, according to Amster.

“Private equity as a business, they’re not stores of capital, they recycle capital,” he said. “We seem to be reaching a point where people don’t just want to transact but … need to transact.”

While firms can manage to be cautious with dealmaking for four to six quarters, they have to start returning capital to their limited partners, which will prompt them to be more active in the M&A market. And as financing markets thaw and sellers become more flexible with valuations, 2024 will prove to be a busier year.

“I do think we’re going to see the beginning of what we’d like to refer to as the valuation reconciliation,” Amster said. “I don’t think it’s become an absolute buyers market, and that’s just because of the supply-demand imbalance, so we don’t expect valuations to plummet but we do expect them to come down.”

Macquarie Capital provides M&A advisory services, equity and debt investments and project finance, among other services. The firm typically advises and invests in companies in the technology, healthcare, business services and infrastructure markets.

Macquarie Capital, for instance, advised academic credential management platform Parchment LLC on its $835 million sale to Instructure Holdings Inc. (INST) in October.

The firm in November acquired testing, inspection and fuel treatment business Camin Cargo Control Inc. for an undisclosed amount.

Listen to the episode with Tom Amster here:

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