EDHEC: How did the Private Equity market perform in 2024?
EDHEC: How did the Private Equity market perform in 2024?
By Frederic Blanc-Brude, Senior Researcher at EDHEC Infrastructure & Private Assets Research Institute and CEO of Scientific Infra & Private Assets, Abhishek Gupta, Senior Researcher at EDHEC Infrastructure & Private Assets Research Institute and Associate Director at Scientific Infra & Private Assets, and Srinivasan Selvam, Senior Researcher in Finance – Solutions at EDHEC Infrastructure & Private Assets Research Institute and Scientific Infra & Private Assets
As we head into 2025, the market or exit price of private equities remain under intense scrutiny amid shifting macroeconomic conditions, increased regulatory oversight, and heightened liquidity demands from limited partners.
We recently produced a report[1] using the privateMetrics database, with a coverage of over one million companies across 150 countries, to provide a detailed analysis of the latest valuation multiples, including EV/Sales, Price/Book, and EBITDA multiples as estimated using the most recent monthly transactions.
Key insights
The report highlights key valuation trends, strategic investment opportunities, and sector-specific insights in private equities using the PECCS® classification system to facilitate accurate peer comparisons.
- The market price of private equities held up despite market uncertainty – exit activity slowed and liquidity tightened, but market price multiples remained elevated, signalling continued investor confidence across most industries.
- Financials, Natural Resources, and Transportation led in EV/Sales, while Information & Communication commanded the highest Price/Book multiples, reflecting strong intangible asset valuations.
- EBITDA multiples highlight profitability premium – Healthcare, Information & Communication, and Professional Services saw the highest EBITDA multiples, while Retail and Real Estate & Construction showed greater valuation dispersion.
- Financial performance impacts multiples differently – while sales and book values declined across many sectors, multiples still expanded, indicating that investor sentiment and future growth expectations outweighed short-term financial weaknesses.
- Subscription-based revenue models, particularly in Health and Information & Communication, attracted higher valuations. B2B industries like Financials and Professional Services remained more stable than consumer-driven sectors.
Reported Net Asset Values (NAVs) versus market prices
The past couple of years have not been very kind to private equities, amid higher rates, a slower exit environment, fewer distributions, and longer fundraising periods. Exit values remain the most debated topic.
Reported NAVs are known to be backward-looking and what used to be described as prudently ‘conservative’ (under-valued) may now be over-valued. NAV discounts of 20-25% in LP-led secondaries for example are not unheard of.
A good approximation of this phenomenon can be obtained by comparing the level of indices that are calculated by aggregating fund-level performance, such as the Cambridge Associates Global PE Buyout Index and the private equities market index represented by the private2000 index. Figure 1 shows the growth in value of one dollar invested in June 2013.
We see that reported NAVs and market prices diverge during long periods. In times of market expansion, NAVs tend to be below fair value (exit) market prices, while in times of market moderation they tend to be the opposite.
As a result, average changes in reported NAVs in 2024 are not providing the full picture of what happened in the market for private equities.
Conversely, privateMetrics does not use or report ‘valuations’ as represented by reported NAVs but instead uses observable exit prices to calibrate an asset pricing model and estimate the market price of private equities.
Figure 1: Private Equities Market (Net Returns) Vs. Fund Manager Indices (2013-2024)
Source: privateMetrics, Cambridge Associates, Preqin – average fees: 2.5%
Conclusion
The private equities market in 2024 demonstrated resilience amid persistent macroeconomic challenges, with market price multiples remaining strong despite headwinds in sales and book values.
Sector dynamics varied: industries with high-margin, recurring revenue models—such as Healthcare, Information & Communication, and Professional Services—commanded premium valuations, whereas capital-intensive sectors saw wider valuation dispersion. Investor confidence has remained intact, driven by long-term growth expectations and an emphasis on scalable business models.
Looking ahead to 2025, private equity investors will need to navigate a dynamic valuation environment with a heightened focus on strategic sector selection, financial discipline, and operational efficiency. As liquidity constraints persist and capital allocation becomes more selective, valuation transparency, risk-adjusted returns, and revenue model sustainability will be critical in determining investment success in the evolving private equities landscape.
[1] The full version of the research, “Private Equities in 2024: The Calm Before a New Surge?” EDHEC Infrastructure & Private Assets Research Institute publication, January 2025, is available here.