Private Equity Deals Reward Larger Companies

by Dennis Stuchell 10. September 2012 13:47
  Private equity investors in the middle market are paying significantly higher multiples to acquire larger firms, while the premium investors place on above-average financial performance is diminishing, GF Data reports. “The tired cliche is proving out this year. Size does indeed matter. What we are seeing is that financial buyers will assign record value to a $100 million property in relation to a comparable $25 million business, that the scarcity of quality deals has eroded the differential between the ‘A’ and ‘B’ businesses at the lower-end of the middle market, and that a business benefitting from both size and quality performance still will be rewarded for both in the marketplace,” said Andrew T. Greenberg, GF Data’s CEO and co-founder. GF Data maintains a middle market database on private equity transactions and valuation multiples (like EBITDA multiples).  This data can be very useful to business owners and appraisers as a sanity check on their estimates of value.  See GF Data website at  
Categories: Advisory

PE Deal Forecast for 2012: Gradual Clearing

by Ken Urish 7. February 2012 10:27
The research firm PitchBook recently completed a national survey to develop a 2012 forecast for the Private Equity Industry. More than 100 senior executives at PE firms ranging to $72 billion in assets responded. The main takeaway according to the survey? Don't expect big increases in deal flow from the modest 2011 levels. A majority of private equity fund managers (70 percent) - regardless of fund size - expect to close only two or three deals during the next 12 months. This is a an increase from 2011, when 47 % of fund managers reported closing no new deals, and another 19% closed only one. While portfolios are in the black, individual companies continue to struggle - 22 percent of respondents indicated that more than 20 percent of their portfolio companies are currently performing below forecasts. But the trends are positive. The portfolio companies are rebounding, as funds continue to mitigate loses and bankruptcies decline.  While 11% of respondents reported declaring bankruptcy for one or more portfolio companies during the trailing 12 months, only three percent expect to do so in the coming year. And significantly, most respondents remain committed to their primary investment strategies. Only 7% have asked to change investment strategies and 11% are expected to do so within the next 12 months. The PitchBook survey was performed for BDO's Private Equity practice. For more details, please see this press release.  
Categories: Advisory