E&Y predicts private equity crunch
Firm says quality of debt has deteriorated, which may lead to a spate of company collapses
Ernst & Young is predicting a spate of
collapses of companies run by private equity funds.
The complexity of deals and the timing of debt repayments will undermine
companies that under previous ownership structures could have survived,
the Guardian
reported.
Keith McGregor, an insolvency partner at E&Y, said: ‘The quality of the
debt has dropped off in the last few years. Debt with a CCC rating has a one in
three chance of going bust within two years. But it is the fastest growing
element of debt in private equity structures.’
Further reading:
Private
Equity ‘to spark collapses’
Advisers say tax attack on
private equity will yield little
Private equity not paying ‘a
fair share of corporation tax’