Private equity players are in for some stiff competition this year, as large-cap PE shops invade the middle-market space, according to a report from PE stalwart Bain & Co.
The company’s Global PE Report details a huge “exit overhang” – more aptly deemed an “exit hangover” by PE Hub’s Jonathan Marino – as PE-backed companies seek exits.
And the mega-deals of the past 10 years or so are a thing of the past, according the report, as detailed by Marino.
Add to that what PE pros call “overhang” – the amount of un-invested capital gathering dust in PE shops’ coffers – and the picture gets a bit dark for the mower- and middle-market shops. There’s an estimated $400 billion overhang in North America alone, according to Marino.
“Hugh MacArthur, head of Bain & Co.’s private equity consulting practice, said he anticipates [general partners] will feel the pressure to deal assets soon – if not now,” Marino writes. “[Limited partners] mostly say they’re not looking to allocate a whole lot more to private equity, either. The fundraising environment is expected to be fiercely competitive. And global buyout deal volume is a long way away from what it used to once be.”
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