M&A values by sector, NAV Financing Boom, Blackstone’s Latest Acquisition

Happy Thursday , we hope you’ve had a great week and are excited for the weekend.

This week’s deep dive reminds us of the continued strategic importance of M&A as a core value creator.

On the trend front, it seems diligence spending won’t be slowing down as firms are expected to spend $80 billion in the next 5 years.

On the deal front, Blackstone secures a $4 billion acquisition in the grocery-anchored real estate space, buying ROIC.

Here’s to closing out another week strong!

— Gaston Brizuela & Santiago Morazzani Senior Private Equity Analysts

In this Issue:

• Data Dive

• Trend of the Week

• Liquidity Corner

• Deal of the Week

• Macroeconomics Corner

• Inspirational History

• Interesting Articles

• Tweet of the Week

📚 Data Dive

M&A's Resilience: Why Deals Still Drive Business Growth

Even in turbulent economic conditions, M&A remains central to business strategy. It provides a faster route to growth than organic expansion, allowing companies to enter new markets, acquire advanced technologies, and increase efficiencies.

The B2B sector leads in both volume and value of M&A deals globally, driven by needs for consolidation and scale. Despite headwinds from high interest rates and geopolitical challenges, M&A continues to offer a path to market resilience, competitive positioning, and long-term growth potential.

Key Data Points:

• B2B Dominance: 36.5% of M&A deals are in the B2B sector from 2013–2024.

• Top Value Deals: 28% of total M&A value comes from transactions over $5 billion.

Economic Resilience: M&A offers companies a way to withstand inflation and other economic pressures through scale and synergies.

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📈 Trend Of The Week

Diligence as a Competitive Weapon

PE firms are shelling out serious cash—about 1% of deal value—on due diligence, with projected spending hitting $80 billion in the next five years. But as deal landscapes get tougher, this check-the-box approach isn’t cutting it anymore. The goal now? Make diligence a true competitive edge. It’s not enough to simply “do diligence”—firms that turn it into a source of differentiation will see stronger outcomes and a bigger return on these sizable investments. In an increasingly complex M&A world, the diligence game is evolving, and the winners will be those who play smarter, not just harder.

💰Liquidity Corner

The NAV Financing Boom: A New Liquidity Lifeline

NAV Financing is evolving from a niche banking tool into a mainstream liquidity solution for PE funds, particularly those in the later stages of the investment lifecycle. By using the fund’s NAV as collateral, PE sponsors can raise cash without issuing capital calls or selling assets at a discount—offering greater flexibility to manage timing gaps and meet short-term liquidity needs. This flexibility is becoming more valuable as PE hold periods lengthen, driven by economic uncertainty and slowed exit markets. With banks expanding their offerings around this model, NAV Financing is poised to continue its growth.

The numbers back this trend: NAV Financing, valued at around $100 billion in 2022, is forecasted to hit $700 billion by 2030. As an alternative to traditional secondary market exits, this financing offers a distinct advantage for funds looking to retain upside without the typical 20-30% discount seen in secondary sales. As a result, NAV Financing is drawing a broader range of users, not only PE funds but GPs and even LPs looking to optimize cash flow while holding on to their equity stakes.

🤝 Deal of the Week

Blackstone Buys ROIC for $4B – Another West Coast Real Estate Power Play

Blackstone is doubling down on grocery-anchored real estate, acquiring Retail Opportunity Investments Corp. (ROIC) in a $4 billion cash deal. With a portfolio of 93 properties in markets like LA and Seattle, ROIC’s grocery-anchored assets are viewed by Blackstone as well-positioned for steady demand. The $17.50 per share acquisition price reflects a 34% premium, underscoring confidence in grocery-based retail’s resilience amid minimal new developments. Blackstone’s Jacob Werner pointed to the sector’s strong fundamentals driven by necessity-based retail. Expected to close in early 2025, the deal has received ROIC board approval and awaits final shareholder sign-off.

📊 Macroeconomics Corner

The Fed’s Tightrope: A Balancing Act Amid New Policy Shifts

As the Fed contemplates its next moves, election outcomes have thrown another curveball. While markets anticipated rate cuts through 2024, President-elect Trump's policy stance—favoring tariffs and tax cuts—signals potential inflationary pressure that could force the Fed to stay cautious. Treasury yields spiked post-election, with Deutsche Bank now expecting inflation to settle around 2.5% in late 2026, raising the stakes for Fed Chair Jerome Powell. Current projections suggest a rate cut in December, but with strong Q3 GDP data and a surprisingly resilient economy, there’s debate over how much the Fed can ease. The pressure is on Powell to balance steady inflation control with new economic policies that are anything but predictable.

Quick Insights:

• Rate Cut Outlook: December cut likely, but no clear path forward.

• Inflation Watch: Core inflation could stay at 2.5% through 2026.

Market Reactions: Treasury yields and the dollar climb, reflecting tightening expectations.

🏆 This Week in History

Musk Sells $5B Tesla Stake After Twitter Poll

In a headline-making Twitter poll in November 2021, Elon Musk asked his followers if he should sell 10% of his Tesla shares, and the answer was a resounding “yes.” The next day, Musk sold off $5 billion worth of shares, momentarily sinking Tesla’s stock by 16%. Although the filings revealed that some of these trades had been set months in advance, Musk’s move echoed his growing public clashes with proposals for taxing the ultra-wealthy. At Tesla’s $1 trillion market valuation, Musk’s tax strategy—exercising expiring options and immediately selling shares—showed he’s as adept at financial timing as he is at self-promotion.

📰 Interesting Articles

🐣 Tweet of the week

"The best way to do it, is to do it"

Amelia Earhart