Private equity exits

September 19 - FT.com - True to its name, the buy-out industry has spent the past few years doing more buying than selling. Private equity firms have amassed portfolios using cheap, plentiful debt. But these assets must be sold to produce profits. According to Dealogic, private equity firms have announced $675bn of acquisitions globally this year, but have pulled off less than $250bn in exits. The mega-funds that private equity groups have raised in recent years remain in investment, rather than exit, mode. To offset the ballooning funds’ purchases this year would require their exits from the past three years combined.

Buy-outs have slipped markedly since early summer. With lenders cracking down on aggressive loans, recapitalisations and secondary buy-outs (flipping assets from one private equity shop to another) look tougher. So funds are cautiously eyeing initial public offerings – and considering how to run better those companies they must hang on to. Read More (Subscription Required)