Private Equity

Published 9 January 2023

There was an interesting article in The Times at the start of the week... perhaps only interesting of course if you are interested in Private Equity ("PE"), which you may well not be. If that is the case, then this might be one of your less riveting reads, and for you, I will try to do better next time.

However, if you are considering an exit, and are of a size in which Private Equity might be an option for you, then read on...

The exciting news, according to Peel Hunt (Who are a city stockbroker) is that: -

"Peel Hunt expects buyout houses to be “early movers” in deal-making this year, “provided the debt markets are supportive”, and it thinks they are likely to focus on takeovers of quoted businesses. It said the European private equity industry was estimated to have accumulated a €270 billion war chest of unspent capital that was waiting to be invested."

Dissecting this; the theory is that investors now have a handle on interest rates, and expect that they will peak at between 4% and 5%. That then gives confidence on borrowing costs against which they can assess return on investment from acquiring a company.

Now, €270bn is a large sum, and so Tina is relevant. Tina or more correctly "TINA" (There Is No Alternative), means that sitting on €270bn with no return from it is not idea, and so Private Equity investors will want to, well, invest it.

Finally, and typically, PE is typically a precursor to activity in company acquisitions at a lower level.

In conclusion therefore, if you are considering an exit, then it may be worth an informal discussion.