When will mergers return? That’s one of the questions that private equity and bankers keep talking to me about.

Deals have slowed since the bubble of 2021, when companies could go public or get sold at a huge valuation. As of Dec. 5, the number of U.S. announced mergers dropped by nearly 19% to 9,579 transactions compared to the same time period in 2022, according to data from Dealogic. The valuation of these mergers tumbled more than 9% to $1.3 trillion. Private equity results were worse. There were 2,665 U.S. announced PE deals, a roughly 28% drop from last year, while the value of these private equity mergers plunged by about 46% to $380.9 billion.

Seller expectations remain the biggest problem hobbling deals. Sellers have been reluctant to accept that they’re not going to get the sky-high valuations of 2021, bankers and private equity execs have said.

Matt Epstein, managing partner and founder of Newbold Partners, said sellers have begun to be more accepting of the lower prices. “It’s a slow process. It’s better but I don’t think there has been some massive sea change,” said Epstein, who has advised on fintech mergers for more than 25 years.

Multiples vary by sector, but some good companies in payments were selling for 15 times EBITDA this year. For strong businesses, valuations can go higher. For example, Thomas H. Lee Partners bought Standish Management, a U.S. fund administrator, for about $1.6 billion, Reuters reported in July. Standish sold for more than 20 times EBITDA, I’m told. 

There’s also EquiLend Holdings, a platform for electronic securities lending and borrowing. Some of the biggest firms on Wall Street, including Goldman Sachs, BlackRock, JPMorgan Chase, and Morgan Stanley, helped launch EquiLend in 2001. Last week, I reported that Welsh, Carson, Anderson & Stowe had won the EquiLend auction. The PE firm is paying more than $800 million for EquiLend, Fortune reported.

EquiLend went up for sale earlier this fall and emerged as one of the hottest auctions in recent months, according to my story. EquiLend sold for roughly 25 to 30 times EBITDA, bankers said. “It’s a crazy multiple,” one banker said. 

Hopes are high that the number of mergers will increase next year. One of the bigger deals expected in early 2024 is Inhabit, the property management software company backed by Goldman Sachs, Greater Sum Ventures, Insight Partners, and PSG. Inhabit is anticipated to sell for more than $2 billion, Fortune reported. 

Epstein thinks any rebound in 2024 will be modest, although he anticipates more deals than this year. “Next year will be better than 2023, but it will be a gradual process,” he said.

Talk to you tomorrow,

Luisa Beltran
Twitter: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.

VENTURE DEALS

- SumUp, a London, U.K.-based financial services company, raised €285 million ($306.5 million) in funding. Sixth Street Growth led the round and was joined by Bain Capital Tech Opportunities, Fin Capital, and Liquidity Group.

- ContactMonkey, a Toronto, Ontario-based internal email communications platform, raised $55 million in Series A funding from Updata Partners. 

- Zafrens, a San Diego, Calif.-based drug discovery company, raised $23 million in funding. Prime Movers Lab led the round and was joined by BlueYard Capital, KOFA Healthcare, Global Brains, and others. 

- Babylon, a Palo Alto, Calif.-based marketplace that offers Bitcoin to proof-of-stake chains, raised $18 million in funding. Polychain Capital and Hack VC led the round and were joined by Framework Ventures, Polygon Ventures, OKX Ventures, and others.

- Gacha Monsters, a Tokyo, Japan-based entertainment and gaming company, raised $3 million in seed funding from Animoca Brands, Infinity Ventures Crypto, FBG, and Big Time Games.

- Invert Robotics, a Dublin, Ireland-based €2.5 million ($2.7 million) in funding. TechNexus Venture Collaborative and Business Venture Partners.

PRIVATE EQUITY

- Brevo, backed by Bridgepoint Advisers, acquired WonderPush, a Paris, France-based push notification platform for apps and websites, and Octolis, a Saint-Mandé, France-based customer data platform. Financial terms were not disclosed.

- Hibu, backed by H.I.G. Capital, acquired the software division of Signpost, a New York City-based provider of live receptionist services. Financial terms were not disclosed.

IPOS 

- Hornbeck Offshore Services, a Covington, La.-based offshore transportation provider, filed to go public. The company posted $571 million in revenue for the year ending September 30, 2023. Ares Partners, Whitebox, Highbridge Capital Management, and Merced Capital Partners back the company.

FUNDS + FUNDS OF FUNDS

- Apax Partners, a New York City-based private equity, raised $900 million for a fund focused on companies tackling environmental or social issues. 

- Harpoon Ventures, a San Diego, Calif.-based Harpoon Ventures, $125 million for its third fund for startups in AI, deep tech, cybersecurity, enterprise infrastructure, and other industries.