Private Equity Market Struggles
2008-05-12 14:55:52 (GMT) (Caymanmama.com - Business News)New York, New York (CaymanMama.com) — CNN reported that around May of 2007, the private equity market was making massive profits on Wall Street. However the shops of private equity are still making profits, the tight condition of the credit market is forcing the investors to re-think about their business model which made them success in past years.
Private equity firms borrow money and purchase companies in order to overhaul their businesses and sell them for a profit within 3-5 years. In the initial 3 months of 2008, the buyout shops saw a raise of about $163 billion which is the 2nd biggest haul of a quarter on the records according to Private Equity Intelligence, a research house based in London.
In financing the deals of private equity firms, they have to get funding from the banks which has become quite difficult in current time as the money lenders are not able to locate investors that are willing to undertake the risks that these deals come with. According to the deal tracker Dealogic, the volume of buyout deal so far in 2008 has just reached $82 billion around the world as compared to $261 billion in 2007 during same period.
“Sales are down, margins are [lower] and costs are up - everything is being squeezed,” says Paul Schaye, the managing director, Chestnut Hill Partners. According to the experts, getting buyers and sellers has become a challenge in the credit market.
CaymanMama.com - Press Release Distribution Service
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