Ralph Schlosstein reports an upturn in transactional activity in the United States. After two years of low activity due to economic uncertainty, which is putting the brakes on mergers and acquisitions, transactions in the first five months of the year were around 40% of those in the previous year. In his view, this period of low activity is coming to an end, and he expects a sustained increase in activity over the coming years, with 2024 expected to be better than 2023, and 2025 even better than 2024.

Despite a downward revision of the Fed's rate cut expectations, Schlosstein points out that this is not having a significant influence on CEOs' decisions. They are more concerned about the availability of capital than its cost.

In private equity, there is a strong accumulated demand both for making investments and for converting these investments into cash for limited partners. Schlosstein notes that these partners are now focusing on return on investment (ROI) rather than internal rate of return (IRR).

He also observes that conglomerates are no longer fashionable, and that there is now a trend towards splitting up companies. Companies are looking to focus on more targeted businesses to maximise value.

Schlosstein concludes that spin-offs and divestments have generally outperformed the market by unleashing an entrepreneurial spirit in businesses that were previously neglected within large conglomerates. 

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