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Private Equity

Industry Outlook

The private equity sector has bounced back after several years of poor performance caused by the economic recession. The number of private equity deals that closed in 2017 reached 4,191, according to Preqin, significantly higher than the 2,376 deals that closed in 2010 soon after the recession. The recession led cautious firms to hold rather than invest hundreds of billions of dollars in capital, and they are now seeking to commit that money to companies. Opportunities should be best at large, well-known investment houses because investors are shying away from perceived risky investments with smaller firms. According to Preqin, “the largest, brand-name managers are receiving the majority of investor commitments, with smaller managers—particularly first-time funds—finding it difficult to raise capital.” Hugh MacArthur, global head of Bain & Company’s Private Equity practice, says that “investor enthusiasm for private equity endures, leaving the industry awash with cash. This is both a blessing and a curse. Funds have ample money to spend, but the competition for deals is fierce. With deals being done at record-high multiples, the right sort of diligence is more essential now than ever before.”

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