2024 has been a challenging year for private equity groups. As these groups work hard to finish the year on a high note, they are facing several economic barriers to success. To help you navigate through these uncertain times, here are the top three biggest challenges private equity groups are facing in 2024 that you need to keep on your radar.
Economic Uncertainty
From consumers to businesses, everyone is feeling the effects of recent economic pressures. For the past few years, both interest rates and inflation have been a thorn in our collective sides. However, we are still expecting to see the Federal Reserve Board lower interest rates in the third quarter of 2024, which would help counter the current sluggish state the economy is in.
While the economy is currently in Phase C, Slowing Growth, conflicting data highlights two different stories. We continue to see growth in the service sector of GDP, as it is performing well. But when we look at the industrial sector, we are seeing negative year-over-year growth rates, as the industrial side of the economy is weaker.
All this uncertainty in the economy has been making it difficult for private equity groups to properly time their actions in order to make the best business decisions.
Geopolitical Tension
Whether it is the ongoing conflict between Russia and Ukraine or the situation in the Middle East between Israel and Palestine, there is a lot of geopolitical tension around the world in 2024.
These global challenges can bring on several economic issues. For example, geopolitical conflicts can bring about supply chain disruptions around the world, which can in turn inhibit a company’s ability to grow if it finds itself stuck with long lead times and material shortages.
With the ongoing Russia and Ukraine conflict, there was an increase in inflation and energy prices, especially for Europeans.
These issues, along with the uncertainty regarding how these global challenges will evolve over time, make it difficult for private equity groups to reduce risk and capitalize on opportunities.
End Market Struggles
As mentioned previously, we are seeing a mild industrial downturn. Whenever there is weakness in the industrial side of the economy, there will be situations where certain end markets see slowing growth while others contract on a year-over-year basis.
Without insight into the performance of these markets, it is a big challenge to figure out which end markets will simply slow and which will go through much more pain.
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Why Work With ITR Economics?
With private equity groups facing these major issues in 2024, you might be asking yourself:
- “Are we buying this company at the right time?”
- “If we buy this business, are we going to experience a lot of pain over these next few years?”
That is where ITR Economics comes in. Our team of expert economists gives you the insights you need to make sure you not only make the right decisions but are confident in your decisions.
Our company forecasts, backed by our unparalleled forecast accuracy, help you see where a company is in the business cycle, what growth opportunities are available in the future, and where the risks will be.
The best place to get started is with our Acquisition Assessment Toolkit. Equipped with this toolkit, you will have a strong advantage during your due diligence phase. We put together a 12-quarter forecast for your target company’s sales data, which provides you with a clear picture of the overall health of the business now and going forward.
Other services, such as our popular Executive Vantage Point™ (EVP) programs, are also extremely beneficial for your portfolio companies. Through our EVP programs, we help businesses identify the positive and negative risks; determine when to invest in technology, equipment, and labor; focus sales efforts in areas that will provide the most opportunity; and so much more.
To help make sure your private equity group is on track to navigate through the challenges 2024 brings, contact us at ITR Economics to see how we can help!