www2.deloitte.com Open in urlscan Pro
2a02:26f0:6c00:1ae::1e62  Public Scan

Submitted URL: https://url6380.news.pitchbook.com/ls/click?upn=-2B0Jlug6i80mluh5Xp2-2BZsfdSR-2BbC0M2D2Pkba6hdCezyIXtYbMRGv7DbvX8RFoEOMAC2kTEc1-2BK...
Effective URL: https://www2.deloitte.com/us/en/pages/audit/articles/private-financial-markets-trends.html?id=us:2pm:3ad:rdtonextq1:eng:au...
Submission: On May 05 via api from US — Scanned from DE

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Analysis


PRIVATE FINANCIAL MARKETS: THE ROAD TO NEXT


MARKET TRENDS AFFECTING INVESTOR-BACKED PRIVATE COMPANIES

The Road to Next series explores investment trends defining the private
financial markets and covers strategies, liquidity concerns, market dynamics,
and more. This latest issue focuses on the future of work at the nexus of tech
and talent, the resiliency of work software dealmaking, and the emphasis on
“human” in human capital.

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At the nexus of tech and talent, the future of work is changing.

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Market trends Regional trends Spotlight


WORK SOFTWARE DEALMAKING REMAINS RESILIENT

Both general expansion-stage and work software dealmaking notched such lofty
highs in 2021—$317.5 billion across 7,200+ completed transactions and $53.0
billion over 1,248 deals, respectively—that any return to tallies closer to
historical averages was likely. 2022 saw more resilience than may have been
expected, however, with work software accounting for 15 percent of total
expansion-stage deal value and seeing a more modest decline in closed financing
volume.

DEALMAKING REMAINS STEADY DESPITE CHANGING MARKET SENTIMENT

Proportional trends in dealmaking across work software remained by and large
steady in terms of volume over the past decade, though a slight decline in Bay
Area tallies suggests declining market sentiment. In years past, variability in
aggregate deal value has been explained largely by outlier deals. However,
tracking work software dealmaking going forward, in tandem with traditional
geographic setups for companies, is likely to prove more challenging.

EMPHASIZING THE ‘HUMAN’ IN HUMAN CAPITAL

As market trends remain relatively dynamic, qualitative data shows that the
appetite for innovation among workforces is strong. A significant opportunity
exists for work software companies to market their solutions as bridging the gap
between ease of use for people at a given type of organization—whether by
structure, sector, or both—and their current needs. Regardless of sector, the
foundation of every business is human capital. The current talent market is as
competitive as ever, and it is likely to grow more so.




THE FUTURE OF WORK

In the 12th edition of our Road to Next series, we focus on the future of work
and how companies can choose work software to invest in human capital.

 * The Deloitte Global Human Capital Trends survey reports that “more than
   90 percent of surveyed business leaders believe that using …technology to
   improve work outcomes and team performance is very important or important to
   their organization’s success. Yet only 22 percent believe their organizations
   are very ready to use technology to improve work outcomes and team
   performance.”1 Survey results also signal an evolution in employees’ desires
   for more flexible, skills-based work and consequent organizational
   structures.2

 * Dealmaking in work software companies has remained resilient even amid
   volatility, with nearly 1,100 completed transactions for well over $30
   billion in aggregate in 2022.

 * Yet this ongoing market volatility is prompting slowdowns in dealmaking—which
   is providing sufficient motive and opportunity for organizations to retool
   and reinvest in innovative work software.
   

1. Steve Hatfield et al., “Powering human impact with technology,” Deloitte,
January 9, 2023.

2. Kraig Eaton et al., 2023 Global Human Capital Trends, Deloitte, accessed
February 6, 2023

ROAD TO NEXT: AT THE NEXUS OF TECH AND TALENT, THE FUTURE OF WORK IS CHANGING.







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For emerging growth companies, the challenge may be grappling with degrees of
uncertainty or not necessarily having the luxury of significant resources to
invest in plenty of preparation, so a key element in our efforts—especially in
usage of any automated tools—is asking the right questions to be better able to
assess risk levels, even in areas unfamiliar to our clients.


— Heather Gates, Audit & Assurance Private Growth Leader, Deloitte & Touche LLP






LATEST NEWS AND INSIGHTS

Explore previous editions of our Road to Next report series

Close
Twelfth edition: ESG adoption and dealmaking remain robust and resilient

As 2022 wound down, few sectors emerged from the economic and market volatility
unscathed. Fewer still seem to maintain an unexpected resilience in the
dealmaking space. This holds true for environmental, social, and governance
(ESG) investment and initiatives, which show no sign of abating. Investment at
the governmental level has been staggering, while multiple groups of
institutional investors and asset managers have pledged to ESG mandates across
their holdings. Dealmaking in the sectors most related to ESG—cleantech, climate
tech, and impact investing—remains healthy even after recent highs. It is also
important to note that the expansion-stage company population plays a key role
in advancing and inventing new tools that will be required to help accelerate
and transform ESG initiatives into true impact.

In the twelfth edition of our Road to Next Report series, we break down recent
investment numbers and discuss how cleantech innovations are multiplying
quickly.

Read more
Read more
Close
Eleventh edition: Dealmaking in life sciences remains healthy in 2022

Like many other sectors, life sciences enjoyed a banner run-up to the early
2020s. This year, dealmaking has remained unexpectedly resilient with 461
completed expansion-stage deals totaling $12.9 billion. While that is not on
pace to meet numbers in 2021, these numbers compare favorably to recent years.

Despite its resilience, the life sciences space is still faced with market
conditions that require more complex strategies. As companies forge ahead with
an eye on the longer term, life sciences executives—realizing that the lines
between technology and life sciences are continually blurring—are embracing
digitalization; renovating their tech stacks; and implementing the latest tools
to achieve efficiencies, cost reductions, and innovation.

In the 11th edition of our Road to Next Report series, we dig deeper into these
market trends, examine the role of technology in life sciences, and look toward
the future of the life sciences ecosystem at the expansion stage.

Read more
Read more
Close
Tenth edition: Are the hottest trends of 2021 winding down, or are they
evolving?

In the United States, expansion-stage companies enjoyed unprecedented levels of
liquidity events in 2021. More than 1,800 transactions closed for upwards of
$1.2 trillion. Although the prior decade saw robust figures for exits, the surge
in both value and volume for expansion-stage exit activity in 2021 is still
striking.

Against that backdrop, the slower start to 2022 looked like a marked decline.
However, when analyzing quarterly tallies, Q1 2022’s exit figures resemble much
of their 2010's counterparts and are slightly above the quarterly dip induced by
the onset of the COVID-19 pandemic reflected in Q2 2020. While there is
significant volatility in current financial markets—particularly in crypto
assets currency—exit rates have not plunged to atypical levels.

However, post-debut performance for companies that listed in the past several
months has not been very encouraging, contributing to the slowdown in offerings
as well as SPACs.

Read more
Read more
Close
Ninth edition: Foodtech sees private equity deal value surge

As tech continues to transform sectors worldwide, food production, distribution,
and consumption are changing significantly. From platforms tackling delivery and
logistics innovation to R&D-intensive enterprises looking to create
nutritionally optimized foods more sustainably, foodtech is experiencing a
period of true dynamism. The surge of expansion-stage dealmaking, as well as a
handful of signal debuts in public markets, signifies the growth rate within the
space.

In this edition of Road to Next, we also explore trends in regional
foodtech—where California continues to dominate even though other metros have
grown their market shares.

Finally, we spotlight increasing funding for sustainable farm-to-table
operations. Organic produce and humanely raised meat are more in line with real
market prices when the impact of subsidies and emissions is considered. Plus,
physicians increasingly emphasize nutrition as the backbone of a healthy
lifestyle.

Read more
Read more
Close
Seventh edition: What’s next for the red-hot enterprise software expansion-stage
ecosystem, remote workforce surge, and resulting tax implications?

Ongoing record-setting investment, fueled by the pandemic, continues to lift all
boats in the technology sector, but none more than the B2B enterprise software
niche. By midyear 2021, expansion-stage deal value set a new record of $21.7
billion.

In this edition of Road to Next, we explore the impact of digital transformation
on enterprise software. How has it accelerated investment, and what are the
resulting tax implications? Among other impacts, companies must grapple with
increasing tax burdens that accompany growth and the advent of digital services
tax.

We also chronicle the dramatic rise of hybrid and fully remote workforces and
their effect on enterprise software adoption to manage fairness, risk, and
resulting tax complexity. One result: even greater growth and investment in
enterprise software.

Read more
Read more
Close
Sixth edition: What’s next for the fintech expansion-stage ecosystem?

The dawn of the post-pandemic era has been dominated by a rapidly deepening
expansion stage, as funding levels and valuations continue to smash records.
Fintech organizations have played a pivotal role in advancing the
expansion-stage environment. With investors anticipating more liquidity events
as the lines between financial services and technology continue to blur, what
can we expect as 2021 rolls on?

In this edition of Road to Next, we dissect what’s behind rising investor
enthusiasm for the fintech space. Plus, we’ll break down the key factors driving
new bullishness around the cryptocurrency and B2B payment ecosystem, and how
fintech organizations vying for category dominance can do so through proactive
compliance and innovative cybersecurity offerings.

Read more
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Fifth edition: What does 2021 have in store for private financial markets?

The private equity expansion stage is deepening. Many mature expansion-stage
companies continue to enjoy record levels of funding, and valuations are rising
at eye-catching rates. But with the unique circumstances of the pandemic still
looming, investors must consider a range of scenarios in a deal environment that
presents significant levels of risk.

In this edition of Road to Next, we continue our investigation of
expansion-stage deal activity in private financial markets and break down the
key factors investors and companies should consider heading into 2021. Though
2020 produced many unorthodoxies across the market, investors remain
enthusiastic with more liquidity events sure to enter the hopper in 2021.

Read more
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Fourth edition: Is the expansion- stage the future of the private financial
markets?

Throughout the 2010s, as the private markets had evolved and grown immensely,
the expansion-stage ecosystem came into being. This segment of the market is
populated by companies that view themselves as category leaders with multiple
unique qualities. Chief among those qualities are the extent to which they were
able to grow while privately held and their novel application of new business
models and/or technology.

In this edition of Road to Next, we investigate the present, near-to-mid-term,
and longer-term venture capital and private equity trends and their potential
impact on expansion-stage companies in particular. Prognostication is difficult
and often prone to error, but a measured consideration of the staying power of
current trends and the potential for change is still worthwhile for executives
and enterprises alike.

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Third edition: Preparing for the post-pandemic era

Amid the expansion-stage ecosystem, multiple companies are positioning for the
post-pandemic era. So far, funding for these businesses has yet to decline
appreciably, despite the initial impact of the COVID-19 pandemic.

In this edition of Road to Next, we explore in detail how expansion-stage
companies have prepared and are preparing for that post-pandemic world during
the last weeks of this summer and beyond. We consider dynamics ranging from
logistic matters, such as the workflows between a mix of fully remote and
headquartered employees, to proofing cash flows against potentially
deteriorating economic trends.

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Second edition: The IPO process in an unparalleled environment

Tracing the development of the expansion-stage companies that went public in the
past decade, especially in the past few years, sheds light on the traits that
led to success and provides insight into how those looking to list can navigate
the current crisis.

In this edition of Road to Next, we explore the primary challenges and leading
options for expansion-stage companies that were preparing for an IPO or already
undergoing the process. We also break down the crucial role private equity funds
can play in the COVID-19 environment, the full economic impact of the pandemic
on the current expansion-stage IPO landscape, and critical fiscal and monetary
measures and their effect on or viability for expansion-stage companies.

Learn how expansion-stage companies can grapple creatively with shoring up
balance sheets, adapting business lines to capitalize opportunistically, and
identifying leading methods to ensure continuity across operations.

Read more
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Close
First edition: An expansion-stage surge in the private financial markets

When the inaugural edition of the Road to Next series was released, the COVID-19
outbreak had yet to transform into a full-fledged pandemic. Now, months later,
everything is different. The coronavirus crisis has created human tragedy at an
unprecedented scale, infected millions, wreaked havoc on multiple segments of
the economy, and cast a glaring spotlight on the weaknesses inherent in business
models and systems across sectors worldwide.

But in the throes of any crisis lie the seeds of opportunity. Even amid the
intense pressures brought to bear by the far-reaching ripple effects of
lockdowns and other emergency measures, some companies are standing out for
their resilience. Whether their response to disruption of their operations and
strategies was swift and effective or their core business lines proved
particularly well-suited, if not critical, in the time of COVID-19, some
companies have led by example.

In this edition of Road to Next, we focus primarily on the expansion-stage
companies that were embarking on the pathway toward an IPO before the crisis
emerged. In addition to addressing other principal obstacles and opportunities
for expansion-stage companies—such as a spotlight covering PE during the
pandemic—this report examines PitchBook data sets in depth to provide analysis
and historical context for liquidity trends around IPOs. From there, Deloitte
leaders address key strategies and tactics for business leaders and teams to
foster resilience and lay the groundwork to thrive, no matter the broader market
conditions.

Read more
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Close
Eighth edition: Health tech stands poised to help transform health care
throughout the coming decade

Ongoing digital transformation, the COVID-19 pandemic, and the rising cost of
health care have pushed expansion-stage dealmaking to new heights. The health
tech sector is no exception, enjoying a record-breaking surge with no plans to
slow down in 2022.

In this edition of Road to Next, we explore the primary forces driving health
tech’s surge in private financial markets, specific industry niches that are
benefitting, and where this investment trend is taking us to next year—and
beyond.

We also examine the consumerization of health care; health tech’s evolving role
in customer loyalty, data privacy, and ownership; and how health tech
enterprises can best meet patient demand.

Read more
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Deloitte and PitchBook have collaborated to produce a distinct methodology and
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