FTSE 350 cash surplus will attract private equity

FTSE 350 companies
may become the target for private equity buyouts by 2008, according to a report
by KPMG.

The firm said companies in the FTSE 350 index will generate £198bn of surplus
cash by 2008, an amount that is ‘sure to lure private equity firms unless it is
deployed wisely’.

KPMG said the companies were unlikely to use it to pay down debt, which could
make them more attractive as leveraged buyout targets.

‘Effective balance sheet structuring has never been as important for Plcs as
it is now,’ said David Simpson, a partner in
KPMG’s corporate
practice. ‘We believe that paying down debt is the least likely
option given that corporates are already conservatively financed.’

Further reading:

Warning signs fail to dampen high-leverage loan market

Corporate governance: Private matters

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