Private equity back to a sellers’ market
So much for a hangover from the financial crisis. Private equity has already morphed back into a sellers’ market.“We are quite surprised by the lending environment,” said Eric Berke, managing partner at TorQuest, at an event hosted by Canada’s Venture Capital and Private Equity Association. Elaborating, he added that the shock stems more from the speed with which leverage has come back rather than its return at all.“On one hand we like it because we can get things done,” Mr. Berke said. On the other hand, he said it is skewing valuations, which are already hard enough to determine because private equity assets are illiquid.All things considered, the return makes sense. Take a look at the public markets. The Canadian market is trading at a 25 times price-to-earnings ratio, said Richard Bradlow, a partner at Penfund, which is in the same area as 2007. It’s just a shock that private equity valuations have come back so strong, so quickly.Deal flow, however, won’t pick up unless the funds find more assets that are up for sale.