thinks that "some signals" seem to be hinting that this is the beginning
of the end of the private-equity party. Well, yes — but then again, pretty
much exactly the same signals were there two years ago, and ended up signaling
exactly the opposite.
It’s worth noting that there are also some signals pointing in exactly the
opposite direction. And rather than being anecdotal, based on public statements
from private-equity professionals who have a vested interest in talking down
the market, the bullish signals are more quantitative.
For one thing, private equity is clearly booming. $281 billion of private-equity
deals have been announced so far this year, triple the level of just one year
ago, and there has been $82
billion in announced deals just this month — a new all-time record,
beating April’s $78 billion and last November’s $81.6 billion.
What’s more, as Alphaville
notes today, there’s still a lot of room for buyouts, with three-fifths of UK
chief executives (I’m sure the proportions are much the same in the US) saying
they are not open to private buy-outs, and 14% saying that they would never
accept an approach of any kind, under any circumstances.
This doesn’t make a lot of sense: CEOs of private companies have just as much
job security, make more money, have fewer regulatory hassles, and have a longer-term
outlook than their public-company counterparts. As more public-company CEOs
realize this, we’re likely to see more, rather than fewer, privatizations. After
all, no private-equity shop likes making a hostile bid: it’s much more
pleasant for all concerned for the deal to be amicable.