Private Equity Deals

When Will Private Equity Deals Return?

According to Pitchbook Data "For the first three quarters of 2008, transaction volume for leveraged buyouts and growth capital financings was 1,268, a 34% decline from 1,935 deals over the same period a year ago." With the credit crunch and the ensuing financial crisis it has been a tough year for executing buyout deals, especially ones relying on leverage. Many banks have tightened the purse strings and are more hesitant to provide private equity firms with the leverage necessary for the mega-buyouts like during the industry's peak a few years ago. So an important--and difficult--question is when will private equity deals return? Erin Griffith from PEHUB reports some of the answers given by the panel at The Deal's 2009 PE Outlook Conference:

Martin Mannion, Summit Partners: The time is now. With discipline, we are seeing the confidence to do deals now.

Jonathan Colby, Carlyle Group: It will probably be the second half of next year before we see any real activity.

Nicole Arnaboldi, DLJ Merchant Banking Partners: It’ll be a multi-year crawl back that will start in the middle market.

Bruce Bowden, Head of M&A, Nokia: The end of this year will be a disaster, and for anything to start looking up, we’re going to need a sign. It could be late into next year.

Erin makes a good point responding to Colby's estimate: "The “second half of next year” sentiment was certainly reminiscent of something I’d heard before, say, at outlook conferences at the end of last year!" Unfortunately, this underscores an important footnote to any panel discussion like this, that it's very difficult to estimate when deals will be made more frequently. The return of private equity deals relies on many variables like investors and private equity firms regaining confidence, the financial crisis resolving, banks lending like before; all of which may or may not happen by the second half of last year. So, while it is important to hear what the big dealmakers are projecting, it's worth noting that predictions like these are probably nothing more than (highly) educated guesses.

Tags: Private Equity Deals, Private Equity Deal, Private Equity Questions, Private Equity Buyouts, Buyout Deals, Buyout reports, private equity deals volume, PEHUB, Private equity conference

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