Deal flow to rise this year, say PE firms
Article Date: Jan 21 2010Almost three-quarters of private equity (PE) firms expect to see an increase in new investments over the next 12 months, according to the Grant Thornton Private Equity Barometer.
Only 4 per cent expect a decline in activity, with the balance expecting deal flow to remain steady, finds the survey of 100 PE executives.
Mo Merali, head of PE at Grant Thornton, says the outlook may improve this year for the industry, but significant recovery will not occur before 2012 because of uncertain economic conditions.
The biggest obstacle to deals being done is not raising debt, which is hindering 51 per cent of respondents, but unrealistic vendor pricing (81 per cent). Difficulty in sourcing good quality investments is affecting 66 per cent of those surveyed.
Adds Merali, ‘The results indicate that the debt market is beginning to thaw. We have recently worked on a transaction funded by debt amounting to more than four times EBITDA, a debt multiple we have not seen in the previous 18 months.’
