This survey shows the overwhelming majority of Private Equity investors expect a continued deterioration in the economic climate over the second half of 2008. Views on this issue were also negative in our previous survey six months ago, but now they are worse. No investors at all responded that they expect an improving environment, and only 25% believe it will be unchanged.

But it is also clear from the survey that investors retain confidence in the longer term future. Difficult times may present the best buying opportunity. 92% of investors responded that they expect to be net buyers in the next six months. This percentage has been high in all the previous surveys, but 92% is the highest yet. The overall view is that deal volumes will remain about the same, but that transaction multiples will be lower.

Key findings are:

• 75% of survey participants expect that the overall economic climate will continue to decline; nobody expects improvement.
• Mixed views about the performance of investee companies: 33% expect improvement.
• Only 8% expect easier conditions for raising new funds or debt finance. 
• Views on overall transaction volumes for the next six months are evenly balanced, but 92% of PEs position themselves as net buyers. 83% plan no exits, nobody plans more than one exit.