Private Equity: Evolving to Meet Current Challenges

Posted By: Karen Fisman

Sky high valuations, fierce competition, and scarcity of quality targets…the oft-repeated description of our current deal environment.  But in the face of that, private equity firms remain resilient, continuing to invest (as they must) and outperforming their public market peers.  According to a recent Pitchbook report, U.S., sponsor-backed acquisitions have increased from 24.7% of all transactions in Q1, 2016 to 29.8% in Q2, 2017.  As for performance, the data indicates that even bottom-ranked PE firms are outperforming the public markets over a one and fifteen-year time horizon, and their top-ranked peers are generating considerably higher returns.

In the first half of 2017, U.S. PE fundraising continued to thrive, bringing along the associated need to invest.  As one industry observer points out: “The simple fact is that if sponsors don’t do deals, they fade away”[1].  But how do they do it in this seller’s market? Based on a review of several industry reports[2] and our own experience, several clear trends emerge...

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[1] Oliver Brahmst, Partner at White & Case

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