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Recommended: Private equity update

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Healthy wariness could benefit private equity

As 2010 began, private equity looked mired in a deep cyclical downturn. Leverage to finance new buy-outs had all but dried up. Some portfolio company balance sheets were in tatters. Many institutional investors, burdened by liquidity problems and faced with mounting paper losses, expected private equity to remain stuck in the doldrums.

What a difference a few months make. Although credit markets remain uncertain and the animal spirits of a strong economic recovery are subdued, pessimistic investors could be missing a unique window of opportunity. Bain & Company estimates that industry average returns on private equity investments made this year could run between 13 per cent and 15 per cent...

To continue reading, please follow link to FT Website.

Author:Hugh MacArthur & Graham Elton,