A Roman Philosopher from the First Century AD once said: “Voyage, travel and change of place impart vigor.” It is with this spirit in mind that CMF has been travelling over the past month to California, New York, Florida and Connecticut. On our journey, we visited over forty private equity funds in an attempt to understand changes and developments going on in the world of mergers, acquisitions, and PE. We noted the following developments in the private equity world that you may not be reading about in your WSJ:
- We’ve all read about the “dry powder” that funds have, but funds are also focusing heavily on aggressively getting ready for portfolio dispositions, particularly in the third and fourth quarter. After crossing the recession chasm of 2008 to 2010, the overall macroeconomic and debt markets are conducive to attractive exit multiples, and investment bankers are confirming the level of activity in the “top of their funnel.”
- Speaking of exit multiples, they are back. We recently heard of a deal that is close to closing with debt levels at five times EBITDA.
- PE funds need help at the analyst level within the general partnerships; everyone is busy, the deal market is open, and the funds held off hiring during the recession. A combination of new analyst hires and using consulting resources to assist in the deal processes (buyside, sell-side) should also become more prevalent in the third and fourth quarter.
Our “Private Equity Odyssey” will continue throughout the year as we look to visit funds in most of the NFL cities – look for additional commentary over the coming months from your CMF Touchpoints.
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