Preqin’s Q1 2009 Private Equity Spotlight Report

April 18, 2009

Preqin has just released the latest issue of it’s Private Equity Spotlight report. As always they do a very good job looking at the current state of fundraising. While they point out the dire state of funds looking to raise money, based on their polling of LPs, they predict that Q1 of this year will have been the low-point in fundraising. The report also has features on Sovereign Wealth Funds, and French funds (Preqin estimates that French funds have over €40 billion in available capital at the moment. Interesting).  

Anyway, you can read all that for yourself:


Debevoise & Plimpton’s Private Equity Report – Winter 2009

March 18, 2009
Here’s the latest installment of Debevoise & Plimpton’s Private Equity Report for winter 2009.  Features a very good cover story on PIPEs.

EVCA & CMBOR Report: Private Equity Can Improve Employee Relations

December 10, 2008

A new study, conducted by CMBOR (the Centre for Management Buyout Research) in association with the EVCA, argues that private equity ownership rarely harms employee relations and, in many cases, actually improves it. The most positive effects were seen in liberal free market economies (UK, etc.), while heavily regulated economies typically reported that the effect of private equity on employee relations was neutral.

Post buyout, real earnings of non-managerial employees increased in over half (51%) of cases, while 47% experienced no change. The amount spent on non-managerial employee training increased in 45% of cases, and fell in just 3% of instances.

Employee best practice was seen to improve, with regular team briefings up from 71% of cases to 90% post-acquisition, while the presence of a consultive committee also rose from 50% to 63% of firms. The number of companies with a unionized workforce post-buyout remained static at 71%.

(Apologies for the links to the reports lately instead of enabling direct downloads.  Since wordpress updated their dashboard a couple of days ago there have been a lot of bugs and glitches.  I’m trying to bypass a few of the problems and hopefully they’ll fix it soon).

Coller Capital’s Private Equity Barometer: Winter 2008-2009

December 10, 2008

Leading secondaries player, Coller Capital, has just published the latest installment in their Private Equity barometer series. Much of the information within can be taken in a “glass half-empty, glass half-full” context depending upon whether or not your an eternal optimist. The vast majority of LPs (a whopping 97%) plan on maintaining or increasing their allocations to private equity. Breaking it down even further shows that 40% of LPs plan an increased allocation (a proportion unchanged since the boom years) while 57% are looking to maintain. Investors’ return expectations for the medium term haven’t changed either with 43% of LPs still expect net annual returns of more than 16% over the next 3-5 years. The problem for investors is not appetite, but stretched allocations and a shortage of cash (these last two factors could also make upcoming capital calls fairly interesting).

The report shows that two out of three private equity investors (LPs) will have little or no ‘headroom’ for new fund commitments by this time next year, with North American LPs being particularly stretched — 28% of them expect to be over their allocations by December 2009. Another interesting little point is that over 75% believe that ready availability of capital is making it too easy for weak GPs to raise funds in Asia.

Here’s the report:

Debevoise & Plimpton’s ‘Private Equity Report – Fall 2008’

December 7, 2008

Prominent international law firm Debevoise & Plimpton (home of alum Dan Taïeb, M.2003) have just released their Private Equity report for the fall of 2008. Always worth reading, this issue has an article on the possible EU regulations facing Private Equity that should be of interest to many in the business in Europe. It also offers a bit of optimism in these times of gray skies for the industry.

The study polled 100 institutional investors (endowments, pension funds, etc.), which collectively hold $1.5 trillion in assets, on how the foresee the future of the buyout business. About 54% of those surveyed think that institutional investors will continue shifting cash away from other asset classes and into private equity. Just 17% said that the industry would pull back while 29% thought that allocations would be fairly steady going forward.

Q3 2008 Small-Cap Private Equity Report

December 5, 2008

According to a new report by GF Data Resources, a proprietary database that collects detailed data on private-equity transactions valued between $10 million and $250 million, small and middle market deal activity slowed slightly in Q3, but the full impact of the economic meltdown and credit squeeze has yet to be seen in the aggregate numbers. The 104 firms that contributed to the report completed 20 deals in the third quarter 2008, in line with the 42 deals that were completed in the first half of 2008.  These firms completed 133 transactions in all of 2007.

Points of interest from the report include: The primary valuation metric – Total Enterprise Value as a multiple of adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (TEV/EBITDA) – averaged 6.1x for the third quarter, up from 5.7x for the first half of 2008 and 5.8x in the second half of 2007. In the year following the onset of the credit crunch the numbers stabilized, but Q3 saw an uptick.

GFDR identified a number of emerging signs of a more difficult borrowing environment for business acquirers in the middle market:

– Senior debt – essentially, borrowing from bank lenders — declined as a multiple of cash flow from 3.1x adjusted EBITDA in the first six months of 2007 to 2.5x in 3Q ‘08.  Total debt – which also includes subordinated debt and other forms of junior capital – declined from 3.9x to 3.3x.

– With less available debt, buyers needed to increase their equity contributions — equity accounted for 49.2% of the average capital structure, a rise of nearly 10 percent from 39.5% in the first half of last year.

– As is often the case when bank lenders retreat and business sellers have not yet revised their expectations about value, subordinated debt providers began to play a more pivotal role in the market place. The percentage of deals utilizing subordinated debt increased over the past year from 45.2% in the first half of ’07 to 50.0% in 3Q ’08.

– Initial pricing on senior debt jumped from 6.6% in the first half of this year to 7.4% in 3Q.  This, however, preceded steady declines in lending benchmark rates since September 30.

The summary for your reading pleasure:

Private Equity Council & Arthur D. Little Report – ‘Demystifying the Credit Crunch: A Primer and Glossary’

November 30, 2008

The Private Equity Council which lobbies on behalf of the large, global buyout shops, and consultancy firm Arthur D. Little have issued a report entitled “Demystifying the Credit Crunch: A Primer and a Glossary” in an effort to contribute to a better understanding of the issues, the terms and the trends that gave rise to the credit crunch. It includes both a background paper and a glossary of terms: