The State of Nordic Private Equity 2022

Entry multiples increased in 2022 to 11, which was the same level as the all-time high from 2019. Prices have recovered after a temporary fall during the pandemic years of 2020 and 2021. Although geopolitical unrest and nervous markets have reduced the number of transactions, the pricing of transactions in the Nordics is increasing, both for private equity and other transactions.

Entry multiples continued to rise in 2022, in both private equity and all other deals in the Nordics. During the pandemic years of 2020 and 2021, the pricing fell temporarily. In 2022, pricing recovered and was back at the same level as for the previous record year of 2019. However, there are now certain differences. Compared to 2019, markets are more nervous, with geopolitical unrest, inflation and increasing interest rates. As a result, the number of transactions fell considerably in 2022 compared to 2021.

In the period 2013-2019, entry multiples increased by more than 50 %, showing that the attractiveness of companies outside public markets increased. By comparison, all Nordic transactions saw a 32 % increase in entry multiples. This indicates increased competition for attractive companies in the private equity market over time, compared to, e.g., the public markets.

When faced with uncertainty, the pricing in Nordic private equity only experienced a moderate and temporary drop. The long-term perspectives of PE funds are resilient in uncertain times. As a result, the uncertainty that arose during 2022 did not have a major effect on pricing, although the number of transactions decreased. This illustrates how well-perfoming companies are attractive, even in uncertain times. However, rising inflation and interest rates during 2022 and in the beginning of 2023 might affect prices going forward, both in the public and private markets.

“In the sectors we operate in, and in the wider market, we cannot say that there has been a massive price multiple drop”, says Fredrik Korterud, who is a Partner at Norvestor.

“Quality companies maintain their pricing to a large extent. But when you get a decline in the stock market and more uncertain times, you will get a slightly lower average price than in a more optimistic market, although we are not talking about any major change. The consequence is often that there will be fewer sales, because those who sit on good companies refrain from selling”, he continues.