The FT reports that Private equity investors are selling assets at the fastest pace since the financial crisis. Private equity doesn’t always get it right, but strong demand from yield-starved investors has made the market ripe for exits. That isn’t necessarily a sign of a market top, but it is an indication that the sales opportunities may be more attractive than the buying opportunities today.
Private equity groups are selling businesses at a faster rate than in the years leading up to the financial crisis as they look to cash in on record-high prices while the global economy remains strong.
Company sales by private equity groups in Europe generated €489bn over the past four years, a third higher than in the peak between 2004 and 2007, according to an analysis of deal volume by the Centre for Management Buyout Research.
The last four years have also experienced the highest prices being paid for assets sold — €254m as an average compared to €151m through the four years to 2007, the analysis found.
“It’s a perfect storm,” said Christian Hess at Investec, the bank that sponsored the survey alongside the British private equity group Equistone. “Anyone that can sell is taking advantage.”
Jeremy Jones, CFA
Latest posts by Jeremy Jones, CFA (see all)
- This is What Can Happen When You Invest Without a Margin of Safety? - November 16, 2018
- Here’s why Diversification is Vital - November 15, 2018
- The Digital Currency Trojan Horse - November 14, 2018