The effects of the downturn on the private equity industry
Opportunities for the bold during a perfect storm
The private equity industry is one of the industries which was affected first by the credit crunch. Private equity deals have decreased both in number as well as in average size from Q3 2007 onwards.
Some portfolio companies, especially those acquired during the period 2006 up to mid 2008, may experience difficulties as a result of the high acquisition and debt multiples. The financial difficulties can be the result of the inability to refinance current debt levels at maturity combined with pressure on operating performance of the portfolio companies given the recession.
This deleverage process will be unpleasant and will take time. This process may include putting up additional equity to reduce bank debt or selling off of (non-)core assets. Many Private Equity investors are getting prepared by identifying the portfolio companies under pressure and have worked out several scenarios for the upcoming interesting and challenging times.
Even though circumstances for private equity are tough, history shows that returns on private equity deals done during a period of economic difficulty tend to be above average. The opportunities for private equity investors are mainly in using the available capital and expertise to save companies and turn them around and by investing the capital available to strengthen financial institutions, potentially in conjunction with governments.
Deloitte is the ideal partner to help you navigate the downturn. Our industry expertise will be bundled to support you with an integrated approach to gain quick insight and to help you develop and execute a focused plan. Our integrated offering focuses on optimising your business portfolio, controlling costs, mitigating risks, optimising tax and improving cash flow and funding.
- We provide you with a complete analysis that assesses improvement opportunities within 2 to 4 weeks
- We are a one-stop trusted partner that has all the expertise you need: one team, many perspectives funneled to one vision, one complete overview
- We have the power to implement what we advise
If you would like to explore how Deloitte can help you navigate the downturn, please contact:
Mobile: +31 (0)6 20 25 20 88
Assistant: +31 20 582 53 13
Stefan de Kruijf
Mobile: +31 (0)6 12 01 14 59
Assistant: +31 20 454 70 20
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