After the financial meltdown of 2008, private equity (PE) was one of the sectors that showed a speedy recovery, and 2017 proved a memorable year for it despite the complex investing environment. In addition to political and regulatory uncertainty in some global regions, PE players also had to navigate a landscape marked by rising economic protectionism and frothy valuations. Nevertheless, the sector delivered a robust performance last year, with fund-raising on a steady upward trajectory and merger and acquisition (M&A) activity on secure footing. Market participants and observers believe that regulatory compliance, valuation risks in certain industry segments, and governance considerations will keep PE investors alert in 2018. Still, both analysts and the industry itself have entered the New Year with heightened expectations, projecting another notable annual performance, comments GoBuyside, a leading New York City-based recruitment platform serving the investment management industry.
In terms of fund-raising, 2017 was an impressive year for private equity, with the Softbank Vision private equity fund attracting $100 billion to set an all-time record in its class. Another unprecedented performance was the $24.6 billion raised by Apollo Fund IX, which made history by becoming the largest buyout vehicle to date. According to multinational asset manager Schroders, 2018 will bring new fund-raising records as many institutional investors continue to bet on PE due to lower volatility as compared to stock investments, positive diversification effects, and exposure to sectors or industries inaccessible through other asset classes. Law firm Debevoise & Plimpton also anticipates another buoyant year for PE fund-raising, noting the trend towards massive vehicles. “We expect to see continued growth with respect to mega-funds as large institutional investors seek to streamline their private equity holdings by directing their capital to a slimmed-down list of the industry’s most recognized firms,” Debevoise & Plimpton said in a report on the PE outlook for 2018.
Analysts are not alone in their optimistic projections for the industry, as GoBuyside notes. PE investors themselves are looking confidently ahead, as apparent from the results of two surveys carried out by PitchBook. In its “Global PE Deal Multiples Report,” the financial data provider points out that 52% of respondents replied with “yes” to the question of whether they considered current deal multiples within range to deliver typical fund returns. Moreover, at least 60% forecast revenue growth in excess of 10% at their companies within the first year of ownership. Shortly after that, PitchBook published its annual “PE Crystal Ball Report,” which showed that 77% of respondents were under no pressure to exit the investment early. Those who remained invested in portfolio companies longer than anticipated did so because their assets continued to gain in value and perform well.
GoBuyside was founded in 2011 by Stanford MBA graduate Arjun Kapur, who chose New York City as the base for his recruitment platform. The company specializes in sourcing and screening top-tier talent for private equity firms, hedge funds, investment managers, and advisory platforms, achieving service excellence through the combination of diligence and proprietary technology. GoBuyside caters to the human capital needs of more than 500 clients, among them Fortune 500 corporations, while its talent network spans over 10,000 firms and 500-plus cities around the world.
GoBuyside – Explores Factors Driving Compensation in Private Equity Sector: https://finance.yahoo.com/news/gobuyside-explores-factors-driving-compensation-025500715.html