In the middle of 2007, the private equity industry started to crumble as the credit crunch shocked the U.S. financial system. Since then, it's been particularly tough for dealmakers.
Yet, according to a cover story in BusinessWeek, the good days may be here again. In fact, private equity may even help the economy get out of its funk.
And, there is historical precedent. Back in the early 1990s, private equity funds were a key source of restructuring and capital infusions. Interestingly enough, some of the players included the Blackstone Group (NYSE: BX), Carlyle and Apollo (yes, these are now some of the largest funds in the world).
But there's a big difference: Private equity funds now have about $1 trillion in capital to put to work.
The deals may be somewhat smaller (because of the continued difficulties in leveraging balance sheets). But we may see the number of deals increase across the board, especially in hard-hit areas like finance, technology, media, energy and so on.
However, I still think it's a stretch to say that private equity will lift the economy. Rather, it will be a driver. But we still need other critical things, such as confidence from companies, to start growing again.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
5-13-2009 @ 1:45PM
Iridium said...
Private equity funds around the world have stolen trillions of dollars from the lower classes over the past 20 years to fill thier giant coffers in order to dole out money like tasty treats to the little dogs who obey thier every command.