Summit Partners' Mannion on PE firm write-downs

Nov. 11 - TheDeal.com - At The Deal's M&A Outlook 2009 conference Tuesday morning, Martin Mannion, a managing director at Summit Partners, spoke about the reluctance of owners to face the music when it comes to write-downs. "We have a Hobbesian choice," Mannion commented. "A lot of people aren't taking the pain. In the industry as a whole, if we took our medicine, it might be for the best.

"There's a lot of folks out there that are saying I don't have to take the pain yet because the capital structure on our deals is so stable, we can wait it out seven years," Mannion said. "Buyout guys tend to be optimistic, and sometimes they don't take their pain fast enough.

"We don't see the sellers capitulating at all," he said. "They're still not willing to come down on the prices."

Nor does he expect write-downs to be the only source of grief for private equity firms. "I think there's going to be fairly large shrinkage in our industry because a lot of firms aren't going to be raising new funds." Read more.