IMF sounds private equity alarm

The International Monetary
has warned that the current level of private equity deal
activity is so extreme that there are risks of matching the worst excesses of
&A booms

The IMF warned that insatiable investor demand for private equity investments
has resulted in over-inflated deal valuations, and left companies financially
vulnerable and saddled with too much debt.

According to
The Times
, the IMF also warned that private equity players are also
exploiting demand for a share in their deals in order to obtain weaker financing
conditions from their investors.

Investors, meanwhile, may be failing to properly assess private equity deals
as thoroughly as they should in the rush to obtain stakes in buy-out deals.

‘The recent wave of M&A is exhibiting some worrying symptoms of the past
and has introduced some new risks,’ the IMF said in a report.

Further reading:

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Private equity’s silent partners

Private equity chiefs face up to tax review

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