Private equity buyers are still dominating the world of M&A. This makes it difficult for strategic buyers to win deals. This is illustrated by the example of Avaya and Silver Lake. Silver Lake is a private investement company who is striving for profit by investing in the existing company Avaya. They want to exploit the existing customers.
Strategic buyers who are aiming for synergie effects cannot buy such a companies as easy as in the 90's. In the 90's expensive deals were often justified by claiming that it would pay off because off the synergie effects. Now the private equity companies who work with a balance sheet free of debt are able to make the highest bid. The strategic buyers cannot overbid the financial buyers these days.
http://www.businessweek.com/the_thread/dealflow/archives/2007/05/avaya_a_near-pe.html
Optimistic reviews of optimistic analysts
Tuesday 12 feb 2008: According to 'Herman Daems' in 2008 the private equity market will continue to boom and is here to stay in Belgium. Although there is a hesitation in the market for the bigger deals, the small-and mid cap market is still booming. He was optimistic because of two reasons. The market is still small in belgium. In 2006 1.5% of all european private equity investements were in Belgium. And second, our banks survieved the subprime crisis without very much damage.
We all know what happened in september that same year so it doesn't have to suprise that private investments over 2008-2009 didn't skyrocketed but fell down. The private funds had to secure there cash.
This illustrates also the predictions of most analysts. Always stay on the wave.
http://www.express.be/sectors/nl/finance/private-equity-blijft-een-voorname-rol-spelen-in-belgi/90462.htm
Study Finds Lag in Private Equity Fund-Raising
Fund-raising dropped to its lowest level since 2004. Private equity funds are finding it harder to raise money this year because of the financial crisis. If investors still choose for a private equity fund they go for the big ones. The funds are also taking more time in 2009 to gather the money they need. The reasons for this are that many companies that had a lot of debt where owned by the private funds who were big shareholders. Not only the results of the market are causing the slowing down of gathering money, the funds themselves are also guilty. Because of the wild and uncertain markets they have a lot of not used cash so it is difficult to ask for new cash if you haven't invested the old cash from the good years.
Fund-raising dropped to its lowest level since 2004. Private equity funds are finding it harder to raise money this year because of the financial crisis. If investors still choose for a private equity fund they go for the big ones. The funds are also taking more time in 2009 to gather the money they need. The reasons for this are that many companies that had a lot of debt where owned by the private funds who were big shareholders. Not only the results of the market are causing the slowing down of gathering money, the funds themselves are also guilty. Because of the wild and uncertain markets they have a lot of not used cash so it is difficult to ask for new cash if you haven't invested the old cash from the good years.
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