Antares conducted this survey over a three-week period between May 29, 2024 and June 21, 2024, primarily via email outreach. The key takeaways are based on survey responses from a total of 138 private equity sponsors and 60 Antares borrowers from a diverse set of industries and business models (32% manufacturing, 27% distribution, 42% services).
About Our Borrower Respondents
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Industry in Which They Operate
| 32% | Industrial – Other |
| 18% | Healthcare |
| 13% | Business Services |
| 12% | Software Technology |
| 10% | Consumer |
| 8% | Industrial – Automotive |
| 7% | Financial Services |
End Markets They Serve
| Industrial – Other | |
| Business Services | |
| Healthcare – Services | |
| Consumer Services | |
| Healthcare – Devices & Components | |
| Industrial – Automotive |
5% Consumer Goods
5% Financial Services
5% Industrial – Building & Construction 5% Transportation
| 5% | Industrial – Infrastructure |
| 4% | Business Services – Government |
| 2% | Software / Technology |
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Most (78%) borrower respondents expect slow growth (0-2%) over the next 12 months with only 10% expecting a recession, while 12% see faster growth, making a “soft landing” the dominant consensus.
U.S. Economic Expectations
In the next 12 months, do you expect the U.S. economy to experience:
78% Slower growth
12% Faster growth
10% A recession
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More than two-thirds of borrower respondents expect healthy organic revenue growth in 2024 with 43% expecting “modest” (3-9%) growth and 25% expecting “strong” (10%+) growth. Only 10% see a decline (presumably those also predicting a recession – see U.S. Economic Expectations section above).
Nearly three-quarters of borrowers expect healthy organic EBITDA growth – a bit more robust than organic revenue growth – suggesting room for margin improvement and supply chain pressures easing. Specifically, 42% are expecting strong growth of 10%+ and 32% are expecting 3-9% growth.
Organic Revenue and EBITDA Expectations
How do you expect your 2024 organic revenue to perform versus prior year?
43% Modest growth
25% Strong growth 22% Low to flat growth 10% Decline
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How do you expect your 2024 organic EBITDA to perform versus prior year?
| 5% 22% 42% 32% |
42% Strong growth
32% Modest growth 22% Low to flat growth 5% Decline
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Most borrower respondents (53%) see net inflation impact as neutral in 2024 versus 2023, with 27% seeing a net positive impact versus 20% still seeing a net headwind. Stronger EBITDA than revenue growth expectation may reflect less of a drag from raw material and wage inflation ahead.
Impact of Inflation on Margins
How do you expect net inflation (i.e., the net of your price hikes versus your cost inflation) to impact your margins in 2024 versus 2023?
53% Neutral
27% Improvement
20% Decline
Most borrower respondents (52%) expect their net headcount to rise versus 2023. This appears consistent with 57% of borrower respondents expecting growth in their industries in 2H 2024.
Headcount and Industry Growth Expectations
Where do you expect net headcount to be at the end of 2024 versus at the end of 2023?
| 52% | Up |
| 28% | Flat |
| 20% | Down |
for your industry will:
58% of PE sponsor respondents see pressures facing their portfolio companies as stable versus 2023, with 21% seeing decreasing pressure. Another 21% see greater pressures in 2024 than 2023, suggesting still a decent sized “tail” for stressed credits.
PE Sponsor Portfolio Pressures
Versus 2023, how would you describe the pressures facing your portfolio this year?
58% Remain the same
21% Increasing
21% Decreasing
Most PE sponsor respondents have strong conviction they will buy a business in 2H 2024. Almost 80% noting a 50%+ likelihood and ~50% projecting the odds at more than 75%. Relatedly, almost 50% of PE sponsor respondents expect a modest to sharp rise in deployment of their investment dollars into LBOs in 2024 vs 2023.
While most PE sponsor respondents indicate they are likely to sell more portfolio companies in 2H 2024 versus 2H 2023, there was lower conviction around selling than buying in 2H 2024. ~56% see the odds of selling at better than 50% with only 23% seeing the odds at better than 75%.
While borrower respondents are mixed (~50/50) on elevated interest rates impacting M&A growth plans (likely industry specific), only 32% see a material impact on capex investment plans.
M&A Expectations
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What is the likelihood that you’ll buy a new portfolio company in 2H 2024?
| 52% | (75% < 100%) |
| 28% | (50% < 75%) |
| 13% | (25% < 50%) |
| 7% | (0% < 25%) |
What is the likelihood that you’ll sell more portfolio companies in 2H 2024 than you did in 2H 2023?
| 33% | (50% < 75%) |
| 25% | (25% < 50%) |
| 23% | (75% < 100%) |
| 19% | (0% < 25%) |
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M&A Expectations Continued…
Versus 2023, you anticipate your investment ($ volume) deployed for new platforms (i.e., LBOs) this year to:
30% Be flat
27% Rise modestly
22% Rise sharply
13% Decline modestly
8% Decline sharply
Are elevated interest expenses materially impacting your growth plans?
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Yes No
| M&A | 53.3% | 46.7% |
| Capex Investment | 31.7% | |
PE sponsor respondents noted that the most attractive industries for new platforms include, in order, Industrial, Business Services and Healthcare (all received 17%+ votes), followed by Consumer (Products & Services), Technology and Financial Services.
- Industrial (29% of all responses) – Industrial (General), Infrastructure
- Business Services (18%) – Business Service (General), Data Info & Marketing Services
- Healthcare (17%) – Healthcare IT, RCM, Pharma Services
- Consumer (13%) – Products & Services (50/50)
- Technology (13%) – Software, Telecommunications, IT Infrastructure & Services
• Financial Services (6%)
As much as 86% of sponsors are exploring continuation funds as a liquidity solution, reflecting a reluctance to sell some portfolio companies. 38% are exploring NAV loans, and 11% are considering selling GP stakes to raise capital.
Liquidity Solutions
Are you exploring or currently utilizing liquidity solutions such as:
100
80
60
40
20
0
About Antares
Founded in 1996, Antares has been a leader in private credit for nearly three decades. Today with more than $68 billion of capital under management and administration as of March 31, 2024, Antares is an experienced and cycle-tested
alternative asset manager. With one of the most seasoned teams in the industry, Antares is focused on delivering attractive risk-adjusted returns for investors and creating long term-value for all of its partners. The firm maintains offices in
Atlanta, Chicago, Los Angeles, New York, Toronto and London. Visit Antares at www.antares.com or follow the company
on LinkedIn at https://www.linkedin.com/company/antares-capital-lp. Antares Capital is a subsidiary of Antares Holdings LP, (collectively, “Antares”). Antares Capital London Limited is an appointed representative of Langham Hall Fund Management LLP, an entity which is authorized and regulated by the Financial Conduct Authority of the UK.
Disclosures:
The materials presented herein are proprietary to Antares Capital LP and its affiliates (collectively, “Antares Capital”).
These materials are being provided solely for informational purposes only and are not intended to be a recommendation or advice of any kind, and shall not be construed to create any fiduciary, advisory or other relationship, or the provision of any investment advice or service. These materials are not, and should not be construed to be, a proposal, a commitment, or a contract to lend, provide any financing, or sell any securities or financial instruments, or an offer to enter into any of the foregoing, and shall not be deemed to obligate Antares Capital in any manner whatsoever.
Antares Capital does not represent or warrant the accuracy, completeness or reliability of any of the information contained herein, either expressly or impliedly, for any particular purpose, and shall have no duty to update or correct any such information. Recipient agrees that it will not rely on the information contained herein, and will conduct its own due diligence. In no event will Antares Capital be liable for any losses or damages arising from or as a result of the use of the information or the materials contained herein. Past performance is not a guarantee of future results.
Any statements involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that such opinions or estimates will be realized. The statements and expressions of opinion contained in this presentation are subject to change without notice and involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon nor should they form the basis of an investment decision.
The materials presented herein may contain information concerning economic trends, performance and market analysis and such information may be based on or derived from information provided by our sponsor or borrower relationships who were not compensated for completing the survey. Antares believes that such information is accurate and that the sources from which it has been obtained are reliable; however, none of Antares nor any of its affiliates or agents can guarantee the accuracy of such information and they have not independently verified and are not responsible for any inaccuracies, omissions and dated information contained in such third-party information or the criteria and assumptions on which such information is based. Certain other information regarding market analysis and conclusions could be based on opinions, criteria or assumptions (including those of Antares) that Antares considers reasonable. Such market analysis and conclusions represent the subjective views or beliefs of Antares.
Expectations and views are as of July 15, 2024, the date of publication, and subject to change.