PE Firms Finding Exits Easier Than Investment Opportunities

June 25, 2013 12:33 by Clayton Reeves in Capital Markets, M&A, Private Equity  //  Tags:   //   Comments (0)

In an article on Dealbook today, this year $62 billion worth of deals larger than $1 billion have been announced, according to Thomson Reuters. That seems to be a positive indicator, as it represents a higher value than all of 2012; however, the purchase of the Heinz Company ($27 billion) and Dell Inc. ($18 billion) are atypical. Heinz was driven more by the oracle, Warren Buffett, than by private equity, and the purchase of Dell was driven by Michael Dell buying back the company bearing his namesake.

According to Preqin research, the industry has $187 billion of dry powder available, which could amount to more than $700 billion of deals. Without the two atypical deals mentioned above, however, 2013 has seen only five deals amounting to $16 billion. The crux of the issue seems to be a lack of confidence in current valuations and wary attitudes regarding private equity by potential sellers. Regardless of these hurdles, the piles of cash sitting in the coffers of PE should find their way to the market by one avenue or another. It remains to be seen when that dry powder will ignite large deal volume.

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