Grant Thornton has released a comprehensive report highlighting the deal activity trends observed during May month. The report reveals a notable decline in deal activity, prompting experts to analyse the reasons behind this slowdown.

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Raja Lahiri, Partner at Grant Thornton Bharat, recently shared his insights on the matter during an interview with CNBC-TV18.

According to Grant Thornton's report, May month experienced a significant decline in deal activity. Deal values witnessed an astonishing decline of over 80 percent compared to previous months, indicating a substantial drop in investor confidence.

Additionally, deal volumes also plummeted, with a decline of more than 45 percent during the same period. These statistics highlight a worrisome trend in the investment landscape.

“It is an 80 percent plus kind of decline in May. First five months it is very similar, 80 percent plus a decline in terms of deal value, 45 percent plus a decline in terms of deal volumes, that is the statistics overall,” he said.

Raja Lahiri identified one of the primary reasons for the slowdown in deal activity as the deceleration in the venture capital (VC) space. According to him, venture capitalists have become more cautious, leading to a significant reduction in investments. This slowdown in the VC sector has likely contributed to the overall decline in deal volumes.

Another factor contributing to the decline in deal activity is the sense of caution prevailing within the private equity (PE) domain. While there have been some noteworthy large buyout deals during May, the overall sentiment remains guarded. Investors appear hesitant to write large checks. This cautious approach toward investment decisions has had an impact on the overall deal activity.

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First Published:Jun 9, 2023 4:24 PM IST