[Edaily Marketin YunJi Kim Reporter] Private equity fund (PEF) managers, who once led major deals in the global mergers and acquisitions (M&A) market by offering high purchase prices, are losing momentum. This is because the burden of securing acquisition financing has increased due to issues such as interest rate hikes, making it difficult for them to offer prices as high as they did in the past. In contrast, public companies with ample cash reserves are actively pursuing large-scale acquisitions. As the acquisition prices paid by private equity funds are also falling relatively quickly, changes are emerging in the competitive landscape of the global M&A market.

According to global market research firm PitchBook on the 13th, while the trend of private equity firms acquiring companies at higher prices than general corporations continues, the gap has been narrowing recently.

This year, the value of companies acquired by private equity firms in North America and Europe stood at 10.9 times annual EBITDA, exceeding the 8.9 times paid by strategic investors (SIs), such as public companies. However, compared to 2024, when the acquisition price multiples for private equity and public companies were 12.9 times and 8.1 times, respectively—a difference of 4.8 times—the gap has narrowed significantly. Following last year, when the gap narrowed to 3x (PE at 12.5x and corporate buyers at 9.5x), it has shrunk to 2x this year, marking the second consecutive year of contraction.

The relatively sharp decline in acquisition prices by private equity firms is largely due to the impact of tightening acquisition financing conditions resulting from interest rate hikes. Private equity firms, which typically acquire companies by combining fund capital with acquisition financing, are facing difficulties in raising funds as loan interest rates remain high and their borrowing capacity has decreased. With less money available to borrow and a heavier interest burden, they have no choice but to lower acquisition prices to meet their target rates of return.

Conversely, general corporations with ample cash reserves are accelerating their acquisition efforts, seeing this as a prime opportunity. This is because they can use not only cash held in reserve but also their own shares as acquisition funds, making them relatively less affected by the acquisition financing market. Recently, an increasing number of companies have been engaging in large-scale M&A to enhance the competitiveness of their existing businesses or secure new growth engines. While private equity firms, hampered by the burden of acquisition financing, are playing it safe, general corporations backed by strong financial resources are expanding their dominance in the acquisition market.

This shift is also reflected in the share of the global M&A market held by private equity firms. According to PitchBook, from January through September of this year, PE buyouts accounted for 31.8% of the total global M&A transaction value, down 9.8 percentage points from last year (41.6%). As the competitiveness of private equity firms in terms of acquisition prices weakens and public companies step into large-scale deals, the share of transaction value accounted for by private equity firms in the overall M&A market appears to have decreased.

In fact, the global M&A market has recently seen a series of large-scale acquisitions led by public companies. A prime example is U.S. logistics real estate firm Prologis, which agreed in August to acquire Segro, a British real estate investment trust, for approximately 13.5 billion pounds. Additionally, global insurance brokerage firm Aon agreed to acquire a U.S. insurance brokerage firm owned by global private equity firm KKR for $17 billion.

Amid this trend, industry sources report that private equity firms have become even more cautious in their investment activities. Analysts suggest that new investments have been put on hold due to a combination of concerns over the sharp decline in the valuations of Software-as-a-Service (SaaS) companies in the second quarter of this year, coupled with uncertainties surrounding the Iran conflict and tariff policies. With interest rate outlooks also becoming uncertain, the burden on fund managers leveraging debt to pursue large-scale deals has grown even heavier.

Global capital markets are paying close attention to the possibility that this trend will continue for the time being. PitchBook stated, “While general corporations are actively pursuing large-scale deals based on abundant cash reserves and synergies from business expansion,” adding, “even if investment firms have secured substantial investment capital, it will not be easy for them to enter acquisition battles with high bids as they did in the past unless conditions for securing acquisition financing improve.”