Private equity fundraising from 82 closed funds totaled only $41 Billion in the second quarter – the lowest level since 2003, according to the Private Equity Professional Digest. This is important news for strategic buyers because it continues to demonstrate that financial buyers will remain limited in their M&A activity – but that the clock is still ticking to take advantage of this environment
PE funds will have to do smaller deals or take less equity in order to make the most of their funds. On the other hand, strategic investors with cash will have the upper hand and should be able to close more transactions – if they are willing to take action.
If a strategic firm will not make investments in their industry in this market, I question their resolve for the industry and also would ask the executives why their wouldn’t use their strong balance sheet in this depressed market? With tongue firmly in cheek — are you waiting for prices to go up before buying?!