Chris Smyth, EY Americas Private Equity Leader, joins Cheddar News to discuss 2021's banner year of private equity market growth, and trends and predictions going into 2022.

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and this is, I've been brought to you by EY, empowering today's leaders to realize tomorrow's opportunities Now. Private equity had a banner year last year with success driven by many different factors. But what does the outlook for P. E. This year look like? Well, joining us now for a deep dive into private equity is chris smith. E. Y. Is America's private equity leader chris. Good morning, Thanks so much for joining us. Could you break down what was driving this huge growth that we saw last year? Yeah. Morning baker and thanks for having me look, 2021 was a banner year for private equity E Wise latest pe paul's shows that we had our first ever trillion dollar year of deal value That we saw. And that was effectively two times the activity that we saw in 2020, that activity was truly while there were some standouts, it was across every geography in every sector. And I would say this was really founded on just a very favorable lending environment. We saw a strong economic rebound coming out of the depths of the pandemic. And as a result of that, you know, 2021 was a year where we saw mega deals being done again. So deals in excess of $10 billion, we saw pes coming together and investing in what is called club deals and just a strong middle market. So all that really led to what we saw was, you know, really the best year for pe, uh, forever. Well, why chris is the private equity sector really so important here. You know, it's, it's, it is interesting. I don't think it's widely understood and it's bigger than many people would think private equity represents, represents about 6.5% of our GDP. And if you just take a step back, I mean, you would see globally, the way businesses are funded today has really transformed over time. In fact, the number of public companies has declined by almost 50% over the last 20 years. Conversely, we're seeing a significant growth in the number of payback companies. So you may be asking like, what is private equity? And you know, we're simply put, private equity is a group of individuals that go out and raise money from pension funds, endowments and foundations. And they're really looking with other outside capital and financing to put that money to work to derive better than average returns and they do that by investing in privately held businesses. And PE is unlike any other industry in that it really is across every sector and managing companies that have varying business models. I'm glad you mentioned that chris and I think I'm glad you mentioned that because a lot of people don't realize how a lot of these pE companies even work. How do they help a lot of these companies grow at the end of the day? Yeah, look, they simply put, they help them transform whether it's their business strategy, their operations, um and or their business models, PE firms work with firms like Ey, given our global reach and the depth that we have in terms of everything from strategy to execution and when I look at pE you think about their secret sauce, I would say PE firms are incredibly disciplined and focused. They have very strong financing and operating expertise and you know, through their role as a shareholder and the governance that they bring to work with their management teams really helps them realize their full potential. So chris what are maybe your predictions in this space for the rest of this year? And do you sort of think we're going to see the kind of growth in private equity again, do you kind of see this sort of trans from last year carrying over this year? Yeah. Look, I am, as I sit here today, I'm incredibly bullish about 20, and, and private equity. Clearly there are some headwinds. Um it's it's probably come as no surprise given some of the inflationary pressures that are out there, expectation of interest rates rising. Uh and clearly I think we're going to continue to see some business disruption with the pandemic that we continue to live in. But as we came into this year, you know, p is still sitting on a war chest of capital. They have over a trillion dollars of capital to deploy. I think also with that we're going to continue to see a lot of our public companies through their own discipline of their portfolio assessments. You know, look to divest of businesses that I think PE is absolutely the right owners to be mine. This is a really fascinating space to watch. Chris. Thank you so much for joining us. Chris might the Ey, Americas Private equity Leader joining us this morning? And guys this segment brought to you by EY, helping you realize your transformation through the power of people, technology and innovation for more, visit ey dot com to learn more.