An overwhelming majority of private equity firms will be doing fewer deals
for less money over the coming 12 months, according to the latest
Thornton Private Equity Barometer which reveals the industry’s most
pessimistic transaction outlook in at least five years.
In the quarterly survey of 100 private equity executives, 85% predicted deal
values would drop over the coming year – up from just 13% who foresaw deal
values falling at the same time last year, and 69% in Q1 2008.
The number of deals being completed in the coming year was also predicted to
decline and 64% of PE houses expected a fall, compared with only 10% in Q2 2007,
and 33% last quarter.
Grant Thornton said it was the most pessimistic deal sentiment expressed by
the industry since the survey began in 2003 and David Ascott, its head of
private equity, said wait and see was now ‘the order of the day’, as private
equity firms held tight for better economic conditions, in order to exit with
returns approaching those envisioned when investing initially.
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