Are Acquisitions Hanging in the Balance as Recession Odds Grow?

December 2, 2022

“The odds of a recession have risen to 65%”

It’s no secret that financial markets in and out of automotive are experiencing slower growth, higher short-term interest rates, and of course, historically challenging labor markets. Economic indicators seem to point to a likely recession, possibly as soon as early 2024. 

According to a recent report from Pitchbook, the rate of dealmaking (PE and otherwise) hasn’t shown such signs of weakness. But tougher financing conditions have the potential to slow down deal activity in the coming quarters. 

Takeaways from the Pitchbook report: 

  • Models are showing that odds of a recession within the next two years have risen to 65% in recent months.
  • The leveraged loan market has nearly shut down as new debt issuance has fallen to the lowest volume in more than two years.
  • Lags between public and private market reporting mean that many LPs’ portfolios are likely overweight in favor of private investments. That could make fundraising a greater challenge for GPs, especially those with unproven strategies.

Click here to download the full Pitchbook report

DCG Acquisitions and DCG Capital stand ready to help our automotive M&A clients navigate these tough waters. Speak to a DCG Acquisitions team member today and learn more about how our expertise can benefit your business.