Market conditions are now providing opportunities for private equity managers and their investors in selective areas of the market according to new research produced by global professional services company Towers Watson.
The research asserts that portfolio company operating performance is stabilising, pricing for new deals is becoming more compelling from a buyer’s perspective and financing packages are increasingly available for the right businesses.
The research references the widely stated relationship between historic periods of economic contraction and strong vintage year performance in private equity. However, it urges caution about the sustainability of this relationship, citing the significant capital overhang as a potential obstacle to the pattern repeating itself.
Mark Calnan, global head of private equity research at Towers Watson said: “A flurry of deal activity announced in early 2010 is testament to the potential for transactions to be created for the right businesses if managers have the skill and capacity to aggressively seek new deals.”
He continued: “While target companies exist across the size and geographical spectrum, we are seeing increasing opportunities in the small to mid-market buyout space and in emerging markets. There are also niche opportunities that we find attractive from a thematic perspective, such as distressed and turnaround managers, which appear to have an increasing supply of opportunities given the economic situation.”
ACQ Magazine